Most CDs offer maturity periods as short as three months and as long as five years. When considering what length is right for their laddered portfolio, an investor must consider their personal financial situation. For example, if they are self-employed or work in an industry that has high turnover, they may want to consider shorter maturity dates that will allow them to have access to their funds – without penalty – at more frequent intervals. Also, if an investor feels that interest rates are likely to rise in the near future, they may choose a shorter term so that they can more easily move their money to a product with a higher interest rate. Using shorter maturity periods can also be an effective strategy for funding an emergency fund with three to six months of living expenses. CD ladders can be set to expire on a quarterly basis with the maturing CD either being reinvested into other CDs or cashed out and placed into a high-yield savings account.
For some younger investors, a good strategy is to start with short-term CD ladders and, as their cash account increases, begin to set aside some of the money in longer ladders while still maintaining approximately three to six months of emergency cash in short-term ladders.