Before opening CD accounts are you shopping around to find the best CD rates available? It is important to properly research your investment and to know that you are buying the best investment that will provide you with generous returns.
Chapter 1. CD Laddering
As you create an effective CD account strategy you need to focus on the CD rates. One investment strategy commonly used with CD accounts is known as CD laddering. With CD laddering you will have the returns on the CDs at different times. Careful planning is vital to CD laddering as it will end up providing you with money that comes at various intervals and you can take this money and invest it back into CD accounts with higher interest rates or you can choose to take the money and invest it into money market accounts. One of the best things about CD laddering is that you will know when payments will come so it gives you a chance to really plan out your investments. Research CD rates and invest in the CDs that are going to give you the best return over the duration as some CDs will be a few months where others are a few years. Pick out a unique strategy like investing $1,000 into a 1-year CD account, $1,500 into a 2-year CD account, and $2,000 into a 3-year CD account. This is a great way to see higher returns based on the higher investments you make.
Chapter 2. Bullet Strategy
Using a bullet strategy is another way to build your investments. The difference with the bullet strategy is that you will invest into several accounts at the same time so they all mature at the same time. You have one huge payout from the CD account and then you can choose to reinvest the money into new CD accounts or you can take the money and invest it into other things. The reason why some people choose CD accounts with long maturity dates is due to the interest rates. The goal is to invest into a long term CD to try and have a better interest rate when the maturity date is coming around.
Chapter 3. Barbell Strategy
With the barbell strategy you will invest in short-term CDs and long-term CDs. You may have some that are just a few months and others are longer than 2-3 years. The goal is to balance risk with high reward. You do not have anything that is medium-term and instead you have the short-terms that will pay off for you or they will fail and you can take this money and invest it into long-term CDs. The goal of having the long-term CDs is for the maturity interest that you will get. However the thing you can learn with the barbell strategy is that the long-term CDs may lessen the interest when they draw closer to the maturity date so you could end up earning more from the short-term CDs.
If you are not sold on the CD account strategies you can look into other investments that will be able to provide you with decent returns. Many people benefit from taking their money and spreading it out into money market accounts or high interest savings accounts.
View a chart of the highest CD Rates available nationwide