Laddering certificates of deposit is a strategy that produces higher returns with minimal risk. The senior does not invest all the money at one given rate of return. The senior is never more than a year away from some of their money. Below is an example of laddering.
You have 25 thousand dollars to invest.
1. In 2011 you invest 5k to mature in one year. This matures in 2012 and you reinvest at a higher rate with 5 year maturity ending 2017.
2. In 2011 you invest 5k to mature in two years. This matures in 2013 and you reinvest at a higher rate with 5 year maturity ending in 2018.
3. In 2011 you invest 5k to mature in three years. This matures in 2014 and you reinvest at a higher rate with 5 year maturity ending in 2019.
4. In 2011 you invest 5k to mature in 4 years. This matures in 2015 and you reinvest at a higher rate with 5 year maturity ending in 2020.
5. In 2011 you invest 5k to mature in 5 years. This matures in 2016 and you reinvest at a higher rate with 5 year maturity ending in 2021.
This affords the investor annual access to their money. The interest earned increases with length of deposit time. The initial investment has an opportunity to work for higher rates of return. Home Care Path www.homecarepath.com encourages all investors to consult a qualified financial counselor before committing to an investment.
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