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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