How to get more than safety with Certificates of Deposit

There may not appear to be anything to gain at first by the fact that we're achieving a long-term rate while receiving cash out in shorter intervals, since the long-term and short-term rates are now so similar.

The twist is using the ladder at smaller intervals, to approximate a 1-month CD!

A closer look at laddered CDs in 2006

A couple of years ago, when Greenspan was busy and interest rates were still declining, anyone speaking about a laddered CD portfolio was describing 5 or more FIVE year CDs, bought with expiry periods one year apart. (Example: the first CD expired in October '02, the second in October 03, etc...)

This gave the traditional investor the ability to obtain the five-year rate but still have access to his money, at least a fifth of it, every October.

Today, however, you can simply buy 1-year CDs to achieve the same effect, because there is no difference in the 1-year and 5-year rate of return. (So I doubt anyone is even buying 5 year CDs right now.)

Therefore, the game has to be played differently, and it still works great on the monthly, instead of yearly cycle. Now you can walk into your bank and buy 4-month & 6-month

CDs, although you may need to purchase once every other month to keep the cycle seamless. Doing so will give you access to a portion of your cash as often as monthly, but you'll be getting the 4 or 6 month rate of return instead!

I highly encourage you to read all you can about Certificates of Deposit and draw your own conclusion before making any investment in these, or any other, form of investment. In keeping with that tradition, I would like to invite you to drop by my free website for Certificate of Deposit resources. It offers a large volume of facts and figures on CDs that isn't published anywhere else on the web at all.

When was the last time someone showed you a way to beat the bank with 100% safety on your money?

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Dennis Gregory is a full-time investor with growing portfolios composed of every major type of financial asset. Learn from his experience at his free Certificates of Deposit rate and resource website.