At Great Eastern Management we recommend staggering your CD maturities in order to get the best performance and yield from your portfolio.  Rates are typically higher the longer out on the yield curve you go, but many investors have short term or cyclical/seasonal needs for money. To insure having money available every month many investors will invest all of their funds in short term (3 to 6 months) CDs and consequently do not take advantage of the higher long term rates.  The simple answer is to use the most time tested investment strategy and build a laddered investment portfolio.  This is the best way to protect yourself from interest rate swings on the way down, and take advantage of the rising rates on the way up.   

    To build a CD ladder just start by investing one CD to mature in 30 days (or 90 days for smaller portfolios) and invest another CD in the same increment all the way out to 3 years.  After you build the initial ladder you will have $100,000 in principal coming due every month for 36 months.  As each CD comes due, if you don’t need the funds you reinvest the CD for 3 years so it comes due just past your last maturity.  

    With this kind of ladder in place you have protection from falling yields because you will have locked in higher rates with your longer term CDs.  As your CDs come due you can reinvest your maturities at 3 years where the rates are always higher.  If yields start to rise you can consistently take advantage of the higher rates since you have maturities coming due every month. 

    This strategy gives you an excellent average on your portfolio (3 year average yield vs. 3 month average yield) and funds will continue to mature for the times you need liquidity throughout the year.

RATE PROTECTION – CD rates are not tied to Prime or Libor and are fixed for the full term.  There are no “Call” features or rate step options that will decrease your rate or have your money sent back to you prematurely in a low interest rate environment.  Maturities should be staggered long and short to guard against interest rate swings. 

CONVENIENCE/SIMPLICITY – You don’t ever have to waste time shopping around for the best rates.  One call to Great Eastern Management will put you in touch with hundreds of the most aggressive CD rates being offered across the country.  Once you decide on the rates and terms you need, we supply you with complete information on each bank.  Your funds are wired directly to the banks on the Fed wire system (we never handle or touch your money) and the CD is set up that day. Great Eastern Management keeps detailed records of all of your CDs purchases.  If you have any questions or problems with the paperwork on your CD we will contact the bank on your behalf.  Prior to all of your maturities we will call you with rollover rates and/or other reinvestment options.