This is Part 3 of a 4-part series about investment strategies for CDs.
Part 1: 3 CD Strategies Part 2: CD Ladder
If you’ve ever been to a weight room, or even watched cartoons as a kid, you’ve seen a barbell. Equal amounts of weight on each side connected by a metal bar.
Now imagine that barbell as a CD investment strategy. That’s what a CD barbell is: an equal balance of short-term flexibility on one side and long-term growth potential on the other with nothing in between.
Let’s look at how a CD barbell could work for you.
More specifically, the CD barbell strategy includes putting half of your investment into a short-term CD and the other half into a long-term CD with nothing in the middle. That’s how you balance flexibility with earning potential. You can also use this strategy to help you meet two separate savings goals with different timelines.
So, let’s say you have $10,000 to invest. You could put $5,000 in a 12-month CD, and the remaining $5,000 in a 30-month CD. Typically, with some exceptions, the longer the term, the higher the interest rate.
Your long-term investment is in for the long haul and will result in some satisfying growth for your savings. But when your short-term investment matures, you’ll have a few options.
The easiest option is to simply let your short-term CD renew and continue growing for another term.
When your short-term CD matures, take another look at rates across the board. It could be a good time to roll your money into a long-term CD with a higher rate.
Life comes at you fast. If an expense comes up, you can use the money from your matured short-term CD to help pay for it.
With an equal balance of long-term growth potential and short-term flexibility, it’s easy to see why the CD barbell is common strategy among CD savers. Achieve your savings goals with a Veridian CD.
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Part 1: 3 CD Strategies Part 2: CD Ladder