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Sharing is Caring: Setting Up a Share Certificate Ladder

Depending on your personality, investing either serves as a thrilling roller coaster ride or an anxiety-ridden tightrope walk 300 feet in the air. The ups and downs of a volatile market leaves some with the feeling that they’d better off staying away, even if it means giving up the opportunity to grow wealth. That’s what makes the safety of a share certificate so comforting.


How share certificates work

Share certificates are basically the credit union version of a certificate of deposit (CD). You buy “shares” of the credit union for terms ranging from 6-60 months. When the certificates mature, you either pocket the interest or invest in more share certificates to keep the investment rolling.

Investing in long-term certificates results in higher rates of return but less access to your money. With short-term certificates, you have more frequent access to your investment funds but they offer lower returns.

But what if you could combine the two?

Here we present the share certificate ladder.

Why you should create a share certificate ladder

A share certificate ladder creates a system where you have regular access to your funds and the highest available rates. You accomplish this by investing in a mix of short and long-term share certificates. If you plan right, then the system works like a well-oiled money machine. The best part is that you retain access to your funds in case of an emergency or a high-cost purchase.


How to create a share certificate ladder

Before building your ladder, you’ll need to assess how much you have available to invest. For the sake of simplicity, let’s say you have $30,000 to invest and you want to create a 3-year ladder.

Begin by portioning your investments equally into 1, 2 and 3-year share certificates. After a year, your 1-year certificate matures and you receive the original investment plus interest. Now you’ll want to take those earnings and invest in another 3-year certificate (or higher term if you choose). If you need the money for whatever reason, you’re also free to hold onto it. But let’s keep building that ladder.

After another year, your 2-year certificate matures, providing you with even more earned interest. Once again, invest in a 3-year certificate.

When your original 3-year certificate matures, simply start the cycle all over again. You now have a ladder full of the higher-yield 3-year investments. But rather than having to wait three years for a payout, you’ll only have to wait a year. You can continue the cycle for as long as you wish. Plus, you can add onto the balance or take some out if you need.


Making “mature” decisions with your ladder

The path mapped out in this post isn’t the only way to go about building a share certificate ladder. Interest rates change monthly, so consider this for your investment strategy. For example, say a 6-month share certificate earns you 1% APY and a 1-year share certificate earns you 1.15% APY. Is it more important to earn the extra .15% in interest or be able to access your money within six months? Questions like these help you develop the sturdiest and fastest growing ladder possible.

Since Vantage West share certificates feature terms up to five years, you could potentially devise a longer 5-year ladder. Use the same method described above, but allocate funds for five years rather than three. This keeps you paid and earning interest for decades to come.

Check out our share certificate rates to plan your craftiest investment strategy and start building that ladder. See you at the top!


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