How to build a CD ladder | Step by Step

What do you build a CD ladder, where you have money maturing at different times, and ensuring you lock in certain rates. One big benefit you know exactly how much money you are going to be making each month, and you know exactly when you are going to get your money back.

So in this video, we are going to build a CD ladder for 5 years, using current interest rates, and at the end of the video, I’ll tell you if this is something that I recommend as an investment.

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1. The definition of a CD
- This a certificate of deposit
- Some CDs have penalties, and make you money
- And some cd don’t have penalties and they make you less money and they don’t lock in rates for as long as the penalty ones

A CD ladder in Normal Language:
- If you have your money split between different CD that mature at different times
- So this way you can get your money when you want it and reinvest if you want to
- But this way you have all the money maturing at the same date, because you may need it

2. Let's do an Example with Real Numbers and Rates
- The. The company I selected for this example is Barclays, beucase they offer the most money, they are FDIC insured and they don’t have any minimums or fees
- However, they do have a penalty

Here is How we Build this Sheet
- First Name it
- Second Label it
- We are going through the amount of years
- The yield of each year
- Amount invested

Then we are going to use a future value to calculate the numbers

3. If you're watching this video, and you are obviously thinking about doing a CD ladder, you have to know that I don’t recommend it as an investment. You could make a lot more money from stocks, and potentially from bonds
- I wouldn’t do a ladder at all really
- If it's maybe for 2 years, and I know I’m going to need a portion the investments
- But for the most part, it doesn’t make sense to me

However:
- If you have 10 million dollars
- And you want to lock in some money, I still don’t recommend it, beucase it wouldn’t be covered under FDIC guidelines
- I would look into bonds

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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I'm an Accountant but I'm not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.

[inchbyinch]

Thanks for the video. I’ve been thinking about a CD ladder. Way back in the day when CDs first came out, before banks were deregulated and CDs could actually earn 6-8%. I had a gentleman come into the bank I was working in. He opened 12 CDs . Each maturing 1 month later than the other. His intent was to use them as an emergency fund. At maturation each month, he could take the interest, take all the money or renew it. Please note that back then a regular savings account was paying 5%. So for him, this was a secure, high yield storage spot for money that he might need access to quickly.

[NoWorriesTJ]

There is a value in safety. Having a portion of your money in a cd ladder or money market has minimum risk. Yes stocks gain 8% on average but what about the years they lose 20% and now youre playing catchup. I value sleeping good at night in peace

[TederaWilliams-kocb]

I always stick with the 12 month or 13 month 5.50% apy an 5.60%apy fina minimum of $1, 000. I don't do 3 years or 5 years because I don't know if I will still be alive. Just like they say retire at 65 it's not guaranteed I might live that long.

[curiosoneee]

I do a cd roll , I keep it all in one cd, roll it every 30 days . It's about the max you are going to get for interest. Right now for me 5.35% and garanteed !

[rion]

Tommy I’m reading so many books and I’m getting so much financial homework it’s crazy

[TheManInBush]

Idea for CD Ladder usage (for "normal" investor) - keep 6 months expenses cash then put 6 months expenses in two separate 1 year CDs started 6 months apart - you would have 18 months safety net (with 12 months earning in CDs) and you would have access to your CD money every 6 months (which the cash safety net could hold you until)
Just my idea after watching this video on how I could use this concept to allow a super large safety next (18 months) to not sit completely idle while still being accessible

[The-PaperChase-NETwork]

GOOD Vid Bro !
Really Informative even tho the end kinda surprised me Lmao

[cloudatlasminer]

Investment ladder using CD’s. Essentially DCA(dollar cost averaging). Which is a good way to stow away x amount of dollars for x amount of years. Especially if it’s has a beneficiary. 5, 000 goal for a year with interest and you’ll have a nice little vacation fund or major emergency fund. I started a CD and I buy BTC with my maturation, and then stake it and get 3% just saying, it’s a safe way to hold usd.

[JedSnell]

Thank you for this informative video. I was looking for the link to the Google Sheets CD Ladder template in your description but it doesn't seem to be there. Can you please share? Thanks.

[CalvinHillMusic]

Word, I’m interested. So I know T Bills are government backed bonds, BUT do you think that it’s better to go with that over CDs? 🤔🤔🤔

[MarisolPerez-msys]

Please post the link for the templates

[dragonchr]

great

as long as you have 5k to invest and the interest rates remain high

[thrills]

Dang fam your views dropped so much. I used to watch you back in 2020/early 2021 and I loved your videos but it seems like finance YouTube plateaued. It gets kind of repetitive, I’d suggest reinventing your channel or switching up the types of videos you make. Still thankful for your channel nonetheless, you helped me a lot back in 2020.

[BigBackFitness]

Bro they sell Champion over there ?, OAN is there Walmarts in DR ?

[dude]

Why wouldn’t you just put it all in for a 12 month cd, and just renew it every 12 months if the 12 month paying more interest

[letsgetitthen]

I found a latter and hit a guy upside the head with and took some cd’s out of his pocket… does that count for anything on this subject?

[edwardsolustri]

You did a good job with the topic!! However you keep saying the word 'basically" which was annoying and distracting. Eliminate that and you could be top notch. 😂