Like all deposits at Communicating Arts, your certificates are privately insured by American Share Insurance for up to $250,000. Certificates offer the benefits of a guaranteed fixed rate of return with no risk to your principal. 

Certificate Laddering: An Alternative for Your Savings

Here's your dilemma: Do you put your money in longer-term certificates to get the highest rate? Or do you invest in shorter-term certificates to keep your money more readily accessible-even if it means settling for a lower rate?

"Laddering" is a strategy that lets you have it both ways. Say you have $4,000 to invest in certificates. Put $1,000 each into certificates that mature in one, two, three, and four years. One year later, your first certificate matures, yielding you $1,000 plus dividends earned. If you need the money, you cash in. If you don't, you reinvest in a new four-year certificate.

The next year, the two-year certificate matures. Again, if you don't need the money, you reinvest in a new four-year certificate.

By the end of the third year, all your money is earning at a four-year rate. Yet a certificate matures each year, so you can tap into the cash if you need it. Laddering gives you both bigger savings and the advantage of maintaining access to your money.

Spreading the maturities from one to four years is just one strategy. If you prefer to tie up your money for shorter time spans, you could invest in three-, six-, nine, 12-, 18-, and 24-month certificates. You can ladder your maturity dates to match the timing of your financial goals, such as: college tuition, vacation plans, home improvements, retirement, or anything else you are saving for.

Not a Member? Join today