CD Laddering Explained

A CD ladder splits your cash across certificates of different maturities. As each CD matures, you reinvest it at the longest rung, smoothing out rate risk.

A simple 4-rung ladder

1. Put 25% in a 6-month CD.
2. Put 25% in a 12-month CD.
3. Put 25% in an 18-month CD.
4. Put 25% in a 24-month CD.

Every six months a rung matures. You can spend it or roll it into a new 24-month CD at then-current rates.