Create and calculate a certificate of deposit ladder strategy. See maturity schedule and projected interest earnings.
| Year | Investment | APY | Interest | Maturity Value |
|---|---|---|---|---|
| Year 1 | $10,000 | 4.75% | $475 | $10,475 |
| Year 2 | $10,000 | 4.75% | $950 | $10,950 |
| Year 3 | $10,000 | 4.75% | $1,425 | $11,425 |
| Year 4 | $10,000 | 4.75% | $1,900 | $11,900 |
| Year 5 | $10,000 | 4.75% | $2,375 | $12,375 |
| Total Investment | $50,000 |
| Amount per Rung | $10,000 |
| Number of Rungs | 5 |
| Average CD APY | 4.75% |
| Total Interest Earned | $7,125 |
| Average Annual Interest | $1,425 |
| Total Maturity Value | $57,125 |
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Amount per Rung = Total Investment ÷ Number of Rungs
Interest on Each Rung = CD Amount × Rate × Years
Maturity Value = CD Amount + Interest
As each CD matures, reinvest the proceeds into a new CD at current rates to maintain the ladder.
A CD ladder is an investment strategy where you divide your money into multiple CDs with staggered maturity dates (e.g., 1-year, 2-year, 3-year, 4-year, 5-year). As each CD matures, you can reinvest the funds, providing regular liquidity and typically higher rates than savings accounts.
Benefits: (1) Liquidity—access to funds regularly, (2) Higher rates than savings accounts, (3) FDIC protection (up to $250k per CD per bank), (4) Predictable income from maturing CDs, (5) Flexibility to adjust rates as market conditions change. Ideal for conservative investors.
Divide your investment into 5 equal amounts. Buy CDs maturing in 1, 2, 3, 4, and 5 years. Each year, one CD matures. Reinvest the proceeds into a new 5-year CD. This maintains your ladder and captures higher long-term rates annually.
CDs are insured up to $250,000 per depositor, per bank, per account type (FDIC). If you have $500k, split it between two banks. If you have multiple maturity CDs at the same bank (different CD products), you might still be insured as separate accounts—verify with your bank.
CDs typically offer higher rates but less liquidity (early withdrawal penalties). Money market accounts offer flexibility but lower rates. A CD ladder is ideal if you don't need the funds frequently. Hybrid approach: keep 6 months emergency fund in money market, rest in CD ladder.
As of 2025, CD rates range from 4.5%-5.5% for 1-year, 4.0%-5.0% for 5-year, depending on the bank. Shop around—online banks often offer 0.5-1% higher rates than brick-and-mortar banks. Compare rates at bankrate.com or nerdwallet.com.
Calculations are for educational purposes only. Consult a qualified financial advisor for personalized advice.