CD Ladder

DEFINITION of 'CD Ladder'

A strategy in which an investor divides the amount of money to be invested into equal amounts to certificates of deposit (CDs) with different maturity dates. This strategy decreases both interest rate and re-investment risks.

BREAKING DOWN 'CD Ladder'

A CD ladder strategy is followed by investors who value the safety of their principal and income. This strategy also provides the investor with steady cash flow as the CDs will mature at different times (six months, one year, two years, etc.).

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    Explore the various options available with certificates of deposit and discover how to find the most lucrative rates for ... Read Answer >>
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  3. Are certificates of deposit a kind of bond?

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  5. What are the typical durations for a certificate of deposit?

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