How People Build Interest Rate Ladders
What do people mean when they discuss "laddering CDs" or "laddering fixed interest products"? They are usually referring to a strategy that people will use to maximize predictable interest income for shorter-term assets but that will still allow some liquidity. A "ladder" typically refers to the purchase of a number of interest-bearing products, like bank CDs or MYGAs of varying durations and interest rates. Generally, products with longer durations pay higher interest rates, but reduce liquidity for the owner. By laddering fixed interest financial vehicles, people can increase their interest income on savings, protect against interest rate volatility, and still build in a measure of liquidity for your money in case of emergency.
The following is for informational purposes only and is not intended to provide any specific financial advice. Carefully review any financial products before making a purchasing decision.
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