Certificate ladders offer a balance between liquidity and returns. By diversifying your investment across multiple certificates with increasing terms, you can capture the typically higher yields of longer-term certificates without forgoing periodic access to funds.
How does it work? A typical five-year ladder, for example, may include five certificates with terms of one, two, three, four, and five years each. As each certificate matures, it's reinvested with the purchase of a new five-year certificate. Then, after five years, you'll have annual access to a portion of your investment while earning the typically higher returns of longer-term certificates. Reinvestment in your ladder is always optional.
Use the calculator below to visualize this strategy in action. Choose one of the sample ladders or customize from scratch. Note that the rates below are for illustration purposes only. Please contact Dort Financial Credit Union for current rates and to confirm certificate availability.
Quickly design a ladder specific to your time horizon.
Select a sample ladder below and customize as needed with your estimated investment and rates.
The bolded example is the current selection. Click it again to start over with default figures.
Certificate One
Certificate Two
Certificate Three
Certificate Four
Certificate Five
* This calculator and estimate is for illustration purposes only and assumes that rates don't change over 0.
One advantage of a certificate ladder is its flexibility. As opposed to investing in a single long-term certificate to maximize yield, each step of the ladder offers the opportunity to withdraw your funds without penalty.
If you choose to withdraw rather than reinvest in the certificate ladder, here are the values of each certificate at maturity:
