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CD Laddering - What's the point?


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There was a time where it made more sense, but money has been so cheap for the past few decades that it just isn't worth it (as you note).  When rates begin catching up to inflation (and it WILL happen), then it is something that would be worth a look.  


Granted, I doubt we will get back to CD's paying close to 20% like in the Carter years, but still... 

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3 hours ago, Burgerwars said:

I've seen articles like this before. What's the point having CDs paying 1%, 1.25% and 1.5% when all those interest rates are nothing, and inflation is 6%? You might as well just blow your savings on beer and hookers, before they raise their prices. ;)




for some people it may be appropriate to worry more about protection (FDIC), even with inflation, than return. The next option might be an annuity contract but those have more risk (and costs) than some people can tolerate.


Also, while inflation as measured by the government is running relatively hot, in practice inflation is a very personal dynamic. I don't spend a lot on gasoline, for example, so a 10% or more increase in gas prices means very little to me in practice. Now if scotch keeps increasing in price, then I may be in trouble.




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Another reason people use CD Laddering is to avoid selling equities. A person might have the first 5 or 10 years of retirement savings in CD's, a sure cash flow, while the equities, hopefully, grow. 

It's never fun or easy selling into a down market so the CD's give you some piece of mind. 

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  • 2 weeks later...
On 12/31/2021 at 4:23 PM, centex said:

Granted, I doubt we will get back to CD's paying close to 20% like in the Carter years, but still


But the Carter era inflation rivaled that of third world nations. At least we didn't get as bad as Zimbabwe where they circulated a trillion unit of currency note.

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