How to Start a CD Ladder

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Starting a certificate of deposit (CD) ladder is simple. The diagram and instructions below detail the process, beginning with dividing the principal and opening the initial set of CDs. In this hypothetical example we will assume that a 3-year CD offers the highest interest rate, that the purchaser wants an equal portion of his/her money to mature each year, and that the purchaser has $30,000 total to contribute to the CD portfolio. You will see that the purchaser will have all of his money in the highest-yield CDs after two years.