A 'CD Mini Ladder' is a savings strategy where one opens multiple CD (Certificate of Deposit) account with different maturity dates (e.g. 1, 2, 3, 4, and 5 years), allowing access to portions of the money periodically while earning higher interest rates. When a given CD in the ladder matures, one can either reinvest the funds in a new CD to maintain the ladder, use the money for a planned purchase, or move the funds elsewhere. It's a straightforward concept once understood. Simply decide how many CDs to open, how much to deposit in each, and what term lengths to choose. Shop around, as there’s no obligation to keep all CDs at the same bank.
As an example, let's build a 5 year CD ladder with 5 rungs, spreading $5,000 equally into the CDs with different maturity dates:
$1,000 into a 1-year CD
$1,000 into a 2-year CD
$1,000 into a 3-year CD
$1,000 into a 4-year CD
$1,000 into a 5-year CD