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Comparing 1-Year CD & 5-Year CD Ladders

Friday, September 28, 2012 - 5:37 AM
A case study at this Jumbo CD Investment blog post compares returns from two hypothetical CD ladders. One is made up of 1-year CDs and the other is made up of 5-year CDs. Here's an excerpt of one of the interesting observations:
Trying to time the market can be quite detrimental to your returns. When rates peaked in 2000 and 2007 many people shortened up their terms because they felt rates were going to keep going up. And as you can tell from the graph, rates went down in more years than they went up. As the evidence demonstrates, a long term CD ladder will beat the returns of a short-term one.

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Ken TuminKen Tumin5,472 posts since
Nov 29, 2009
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