CD Ladder

AAA

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.

INVESTOPEDIA EXPLAINS '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.).

RELATED TERMS
  1. Maturity Date

    The date on which the principal amount of a note, draft, acceptance ...
  2. Bond Ladder

    A portfolio of fixed-income securities in which each security ...
  3. Bond Laddering

    A portfolio management strategy and model for investing in fixed ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. ...
  5. Interest Rate

    The amount charged, expressed as a percentage of principal, by ...
  6. Treasury Yield

    The return on investment, expressed as a percentage, on the debt ...
Related Articles
  1. How To Create A Laddered CD Portfolio
    Insurance

    How To Create A Laddered CD Portfolio

  2. How To Prepare For Rising Interest Rates
    Investing Basics

    How To Prepare For Rising Interest Rates

  3. The Treasury And The Federal Reserve
    Bonds & Fixed Income

    The Treasury And The Federal Reserve

  4. Introduction To Commercial Paper
    Bonds & Fixed Income

    Introduction To Commercial Paper

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center