Anybody use cd ladders

[Tybee]

I know these are oldfashioned and interest rates horrible, but is anyone going to the trouble of doing cd ladders for emergency funds?

I have always wanted to do this for psychological security reasons and am still drawn to it, horrible interest rates and all. Thinking of starting to do this at Ally.

Is anyone else doing this, and if so, why? The why nots are obvious, but if you are laddering cds, why are you doing it, and does it give you psychological benefit?

Thanks!

[bae]

At the moment, the returns are so low that it isn't worth the time or bother for me. I just let spare cash sit in the rollover cash funds investment account at my broker, which returns, well, very very little too, but has the virtue of having the gains automatically imported into my tax preparation software.

[Tybee]

Yeah, the returns are indeed that low, and it is a bother--but it just seems so cool, to have a month's living expenses rolling over every month. But then we are living much closer to the bone than many, and getting older and sicker!

[frugal-one]

I agree with Bae. The amounts are so miniscule now that it is a waste of time to do ladders. Just throw it into one place you won't get much (or any) more by laddering.

[sweetana3]

We have a balanced approach to our net worth. A % in taxable investments, a % in tax sheltered accounts, and a % in cash or equivalents. The cash allows me to sleep at night and since it is not necessary for living expenses, it is in a CD ladder. Over the decades we have had a variety of CD's, the interest rate has varied from 13% to 1%. Note that this is not emergency money. That is kept in "high yield" but fully accessible accounts.

[Tybee]

We have a balanced approach to our net worth. A % in taxable investments, a % in tax sheltered accounts, and a % in cash or equivalents. The cash allows me to sleep at night and since it is not necessary for living expenses, it is in a CD ladder. Over the decades we have had a variety of CD's, the interest rate has varied from 13% to 1%. Note that this is not emergency money. That is kept in "high yield" but fully accessible accounts.

Yes, Sweetana , that was the arrangement I was talking about, and the rationale. I like to have cash, too, and would like to have both emergency money and a cd ladder, although right now, the rates do not support it, I know. I just like the idea, and wondered if anyone else still doing one.

[rosarugosa]

Hey Tybee, I've been working on building a small CD ladder with some of our cash/emergency fund assets. No, we aren't going to get rich on the interest, but the rate for 5-year CDs is closer to 2% that the 1% we're getting from our online savings account, and more is more, right?

[Tybee]

Hey Tybee, I've been working on building a small CD ladder with some of our cash/emergency fund assets. No, we aren't going to get rich on the interest, but the rate for 5-year CDs is closer to 2% that the 1% we're getting from our online savings account, and more is more, right?

Yes, absolutely, plus I like the set quality of it--set and forget, and as the rates go up and you renew them, you already have the structure in place.

[Rogar]

After the fed saying they are going to raise interest rates about 3 times in the net year and some hints it could be more if inflation becomes an issue with trump's stimulus, I'd hesitate to buy CD's very far out on the time horizon. Of course interest rates are hard to predict, but there does seem to be some reasonable risk of higher rates. I do like the concept, but just not right now.