What Is a Share Certificate Ladder?

March 27, 2024 by Chevron Federal Credit Union

Building your net worth over time and achieving financial stability is possible, and there are some innovative solutions like share certificate laddering that can help you get there.

Share certificate laddering is a method that allows you to strike a balance between liquidity and higher returns, providing a solid foundation for financial growth. Here’s how it works.

What is a share certificate ladder?

A share certificate ladder is a financial strategy that involves dividing your investment into multiple share certificates with varying maturity dates. Instead of investing a lump sum in one, a ladder allows you to stagger your investments across different time frames. For instance, if you have $15,000 to invest, you might divide it into three share certificates with $5,000 each, and they mature at different intervals. This ensures that a portion of your investment becomes accessible periodically, providing liquidity while also giving you the option to re-invest or “ladder up” your funds.


The share certificate ladder strategy offers several advantages. It provides a steady income stream as your share certificates mature at regular intervals. Once matured, you can withdraw the funds without penalty or potentially capitalize on higher interest rates by laddering into another share certificate.

Additionally, share certificate ladders can serve as a reliable savings tool, helping you achieve short-term goals without sacrificing long-term financial growth. For example, you could invest in a short-term certificate at the higher interest rates available today and use the matured funds for a planned expense like vacation or home improvements.

How to build a share certificate ladder

Constructing a share certificate ladder isn’t difficult.

For example, suppose you have $15,000 to invest. You decide to create a short-term ladder with share certificates maturing every few months. You could invest:

●       $5,000 in a 9-month share certificate

●       $5,000 in a 18-month share certificate

●       $5,000 in a 24-month share certificate

This way, you split your overall investment into several share certificates with different maturing rates. Every few months, one of your share certificates will mature, providing you with access to funds without penalty. This flexibility can be crucial if you need to access your money.

By spreading your investment across multiple share certificates with different maturity dates, you also hedge against interest rate fluctuations. If rates rise, you can reinvest at higher rates; if rates fall, you still have share certificates earning at the previously higher rates.

As each share certificate matures, you can reinvest the proceeds into a new share certificate of the longest term – in this example, 24 months – thus maintaining the ladder structure. This way, you continuously benefit from higher interest rates while preserving the option to access a portion of your funds regularly without the penalties of early withdrawal.*

A share certificate ladder can be a versatile tool for those seeking a balance between security and growth. By strategically dividing your investments across different maturity dates, you can enjoy a steady income stream, enhanced liquidity, and the potential for long-term growth.

Have questions? We’re here to help and are just a phone call away. If you’re ready to get started, we offer share certificates with locked-in return rates up to five years. 


*The minimum balance to open a Share Certificate is $500. All certificates are subject to an early withdrawal penalty. Fees could reduce earnings. Dividends are compounded daily and paid monthly.



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