Certificates of Deposit (CDs) | |
Certificates of Deposits, or CDs, are fixed-income investments that generally pay a set rate of interest over a fixed time period. One of the significant advantages of CDs is that the Federal Deposit Insurance Corp, or FDIC, insures CDs up to $250,000 per account owner, per institution, a coverage limit that was made permanent in 2010. Fidelity offers FDIC-insured brokered CDs, which are offered by commercial banks and thrifts to raise funds. CD rates
What is a CD Ladder? A CD ladder is an investment that keeps producing a profit every time a CD reaches maturity. | |
How it works:
If yo invest into a 3 Month CD @ .35%. It will reach Maturity in 3 Months.
Lets look at the 3 Month plan. Starting with a $1,000. CD investment.
$1,000 x .35% = $1,350.00 Every 3 Months
Do this every 3 Months and at the end on 1 year, You will have made $1,400.00 in profit. Just off 1 CD every 3 months.
Now lets look at the CD ladder Plan.
For Example:
If you Buy a CD in January, it will reach maturity in March.
Buy another CD in February, it will reach maturity in April
Buy another CD in March, it will reach maturity in May.
You will have reached your first mature CD in 3 Months.
After you reach your first mature CD, take that $1,300. Re-invest a $1,000 to re-purchase a new CD and take the $350 as profit. Then after you have started your CD ladder, Every 3 months. You will have a mature CD.
You can do this in 3,6, and 12 month cycles.
To purchase a CD, just go to --> https://www.fidelity.com/cds/
