Has anybody here had experience with "laddered CD's"?

[CTyankee]

I'm considering a small investment with a 6 month time frame as a kind of "something is better than nothing" point of view and would like to hear from folks who have tried them...

[Jazz Ambassador]

1. 6 month time frame?

Do you mean you need your money in 6 months, or you're going to ladder in 6-month increments?

If the former, that's too short a time frame to ladder. Otherwise, laddering is a good strategy for keeping money safe and somewhat liquid. I don't do it (still young enough to have have most of my money in stocks and bonds), but I've set up ladders for my mother.

[eridani]

21. I agree. Ladder them in 1 and 2 year increments

The interest rates won't suck forever.

[Yavin4]

2. You're Not Going To Get Any Kind of Return on a CD

The best bet is just plunk your money into a savings account and wait for interest rates to go back up which they probably will in two years.

[Jazz Ambassador]

3. You will if you ladder

But you need a longer time-horizon.

[CTyankee]

4. The question is what is the ladder? One year? One and a half year?

The risk is that if interest rates go up, my money will be locked in at a lower rate. And nobody knows the future, obviously.

[sarcasmo]

5. I would pay off all my debt instead of taking a risk that the interest rate would go up.

[CTyankee]

8. I never carry any debt so that is not a worry...but I agree with you,

if I had debt I'd pay it off first...I stopped paying interest on cc's over 20 years ago and paid off my car in 2001...

[lapislzi]

6. The idea is to get the interest rates to work in your favor.

You break out your sum to be invested into chunks. Now, when interest rates are low, choose the large sum for the short term (6 - 12 months). Throw another chunk into a 12 - 18 month. And another, smaller one into the 3 - 5 year plan. And so forth, depending on how much you have to invest. Keep rolling them over. At some point, you can reasonably expect interest rates to rise, and your initial sum will earn you a bit more. Or, you can pull your short term pile of cash when it matures and throw it at an investment with better returns.

It's just a simple way of playing the odds. I've been doing it with some of my 401(k) money. It gives me the illusion and false comfort that at least I'm doing *something* with the money. There are worse, and riskier ways, to invest.

[CTyankee]

9. I really see this as a way of getting some income because I am a senior.

I see rising prices everywhere and how to pay for them all is an issue...I have other investments and annuities...so this is a minor investment...

[lapislzi]

11. If you're going to do it, it has to be long-term

The whole idea of the "ladder" is to have staggered maturity dates, as interest rates fluctuate over time; you'll eventually strike gold on one or more. It makes no sense in the short term. There are better short term investments out there.

Right now interest rates suck, so you have to be prepared to wait for them to go up, which may not happen for quite a while.

Talk to your financial planner. A handful of pennies worth of interest is not a hedge against inflation.

Good luck.

PS Full disclosure: I'm going to die at my desk, so I have no place giving out financial advice!

[CTyankee]

13. I see your point, however, my other investments are really doing the heavy lifting.

This is just part of the mix...

As for dying at your desk, I've heard people say that but the funny thing is, people often don't. I've already told my kids that when I get really old and out of it to stick me into the cheapest arrangement possible...no fancy nursing home stuff...I'll be gaga anyway so I won't know anything...

[eridani]

22. I was going to suggest adding to annuities

Usually there is a given percent you can withdraw risk free, and returns are higher than CDs. But if you have all the money in annuities that you want, CDs are the next best thing, IMO.

[CTyankee]

24. I think I've done with adding to my annuities...

Right now I want to add to the little that's there in an account not earning ANY interest. Yes, it's liquid. Do I need it, well, I haven't so far which has been 7 years since retirement...perhaps I can let loose of some of the money I was holding onto just as my "liquidity" and let it get a "little" bit of income, instead of "nothing."

[still_one]

7. If it is only 6 months, then just park it in a Vanguard GinnieMae, VFIIX fund. Low cost, low risk,

and you will make about 3%

[CTyankee]

10. I'll have my investment guy check into that! thanks!

[still_one]

15. You can buy this through Vanguard or any discount broker yourself. It is a mutual fund.

Doesn't have to be Vanguard, but they are the lowest fees around

[CTyankee]

19. I hear it's "no load." Great!

[still_one]

20. I would NEVER recommend a loaded fund to anyone. I do not think anyone can show me the performance

of a load verses a non loaded fund is that much better. Definitely not in regard to government securities, which is what these are

[Yavin4]

12. That's What I Do

I use Vanguard funds for mid-term risks.

[still_one]

14. They are the lowest fees in the business /nt

[Philippine expat]

16. Back when Cds paid a decent interest I

did this with them laddered over 5 years. If I read your OP correct and you need/want your money in 6 months then I would recommend
one large CD for 6 month period

[Ratty]

17. My five year CD is about to mature

I'm also wondering what to do with the money. Interest rate was 3.54% and I was pissed it was a full point less than my last 5 year term. Nowdays 3.54% is pretty good I guess.

[Yavin4]

18. Nowadays, 3.54% Is Well Beyond Good

You'll be lucky to get 1%. My savings pay me .8%. Might as well stuff it in a matress

[CTyankee]

23. I know, I was just thinking about money that was at your mattress level and

anything above that...so I thought about the laddered CD,which ain't much, but better than nothing...so that is something, isn't it?

[Yavin4]

25. It's A Very Little Something, But Inflation Is Killing You

As we age, our primary costs will be healthcare, and that goes up 8-9% per year (at a minimum). So that kills your savings.

[CTyankee]

26. Yep, my big cost driver! This is what I am trying to head off!

I have been strategically investigating this way for the last 4 years.

[Yavin4]

28. There's No Risk Free Way To Keep Pace with Inflation

esp. healthcare inflation.

[CTyankee]

29. I have some risk in my investments for that very reason.

But I am pretty risk averse since my big loss with GM....but while it was still afloat it paid very well...I'm just glad I only lost about half of my initial investment...I really thought I'd lose it all...

[B-Stupid]

27. If you can tolerate some risk

check out SAMBX. It's a floating rate high yield (junk) bond fund, but the duration is extremely short, 0.50 years if I recall correctly. It's yielding close to 5.8%-not bad for a highly liquid, short-term bond fund.