IS A CD LADDER RIGHT FOR YOU?
Gaye Pike

Is a CD Ladder right for you?

Do you have CDs all over town? Are you tired of calling all the local banks and shopping CD rates? Do you find it annoying to have to drive in your car to close out one CD and drive to the other side of town to buy a new one? Are you tired of getting year-end 1099s from multiple financial institutions?

How awesome would it be to be able to see your CDs on one monthly statement and have one trusted advisor when you have questions; have one trusted advisor that calls you when your CD matures to see if those funds are needed before automatically rolling them into another 1-year CD?

Did you know at NBC Securities that we have a bond desk at our fingertips with access to hundreds of FDIC insured CDs from all over the country?

Here’s an example of (3) CDs that are currently available at the time of this writing:

10/07/2016: .65%
10/10/2017: 1.20%
10/09/2018: 1.70%

Let’s put equal amounts of money into each of these three CDs. Next year when your 1-year CD comes due, we’ll call and inquire if you have need of the funds. If you don’t… we’ll go out there and buy you a 3-year (2019) CD. The following year, when your 2-year CD comes due, we’ll do the same thing. It’ll be a wash, rinse, repeat cycle.

The philosophy behind a CD ladder is this: Historically, in a typical economic cycle, a 3-year CD maximized the yield at that point in time. Look at the enclosed example… See how there’s a step up the farther we go out. We go from .65% to 1.20% to 1.70%.

Three years is about the farthest that we want to go out in this era of low rates. Why would we want to lock up your rate for 5 or 10 years when rates may start to rise in the near future?

What do you think? Is this something you would like to learn more about? Call us… We would love the opportunity to sit down and discuss this idea with you further.



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