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.).

RELATED TERMS
  1. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. ...
  2. Brokered Certificate Of Deposit

    A certificate of deposit (CD) that is purchased through a brokerage ...
  3. Fixed-Rate Certificate of Deposit

    A certificate of deposit (CD) which has a set interest rate to ...
  4. Index-Linked Certificate Of Deposit

    A certificate of deposit (CD) with a return based on a specific ...
  5. Promotional CD rate (Bonus CD rate)

    A limited-time offer of a higher rate of return on a certificate ...
  6. Bond Laddering

    A portfolio management strategy and model for investing in fixed ...
Related Articles
  1. Managing Wealth

    Save Smart With A CD Ladder

    A CD Ladder allows you to stagger your investments and take advantage of higher interest rates.
  2. Managing Wealth

    How To Create A Laddered CD Portfolio

    Laddered certificates of deposit offer safe capital and predictable cash flow, while bringing simplicity to your portfolio.
  3. Investing

    Are CDs Good Protection For The Bear Market?

    Certificates of deposit promise stable income in any market, but do they deliver?
  4. Investing

    Certificate of Deposit (CD)

    A certificate of deposit, or CD, is a common financial product sold by banks, thrift organizations and credit unions. This type of product is often called a time deposit. CDs are insured up to ...
  5. Investing

    Long-Term Investing With Equity Index CDs

    Equity Index CDs are perfect for investors who don't mind hanging in for the long term.
  6. Investing

    Money Market vs. CDs: Which Is the Better Investment?

    Find out which short-term savings vehicle, a money market account or a certificate of deposit, is a better investment for your needs.
RELATED FAQS
  1. What is considered a good interest rate for a certificate of deposit (CD)?

    Explore the various options available with certificates of deposit and discover how to find the most lucrative rates for ... Read Answer >>
  2. Can certificates of deposit (CDs) lose value?

    CDs are FDIC insured, so they do not lose face value, though broker-issued CD accounts do carry risks. Read Answer >>
  3. How safe an investment is a certificate of deposit?

    Discover certificates of deposit, their basic makeup and numerous variations, and understand why they are some of the safest ... Read Answer >>
Hot Definitions
  1. Stop Order

    An order to buy or sell a security when its price surpasses a particular point, thus ensuring a greater probability of achieving ...
  2. Free Rider Problem

    1. In economics, the free rider problem refers to a situation where some individuals in a population either consume more ...
  3. Dumping

    In international trade, the export by a country or company of a product at a price that is lower in the foreign market than ...
  4. Tender Offer

    An offer to purchase some or all of shareholders' shares in a corporation. The price offered is usually at a premium to the ...
  5. Ponzi Scheme

    A fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns ...
  6. Dow Jones Industrial Average - DJIA

    The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange ...
Trading Center