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Certificate Ladders Help You Reach Bigger Savings

Laddering certificates a tool that big savers use to keep their money growing while still accessible if needed. But small savers can use the tool, too--and become big savers in the process. "Laddering" is a strategy that lets you have it both ways.

Say you have $5,000 to invest in certificates. Put $1,000 each into certificates that mature in 1, 2, 3, 4 and 5 years.

One year later, your first certificate matures, yielding you $1,000 plus dividends earned. If you need the money, you cash in. If you don't, you reinvest in a new 5 year certificate, at a higher dividend rate.

The next year, the two-year certificate matures. Again, if you don't need the money, you reinvest in a new five-year certificate. By the end of the fourth year, all your money is earning at the five-year rate. Yet a certificate matures each year, so you can tap into the cash if you need it. Laddering gives you both bigger savings and the advantage of maintaining access to your money. Are you starting with less? You could invest smaller amounts in three-, six-, 12-, 18-, and 24-month certificates. Again, as each matures, reinvest it for the longer term certificate until all your certificate money is earning at the higher rate. You can ladder any way you wish to meet your financial goals. For help starting your certificate ladder give us a call.


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