How Much Can You Lift In Savings
Like the gym or any other physical activity building savings can take time and practice. We are ready to get in the financial gym with you so you can gain a new financial strength. Take a look at some short term goals you may want to reach within the next 3-5 years and challenge yourself to shape your savings the way you want it.
With interest rates so low, getting the most out of your savings can be a challenge – but we know our members are up for a good challenge. So how do you build a core savings that can help you balance life without causing a muscle cramp on your funds for years and years? Start flexing with the magic of Share Certificates or Certificate Laddering.
What’s a CD/Certificate?
Certificates of deposit, or as we call them share certificates, are like a savings account where you can’t withdraw the money for a certain period of time. In return for agreeing to keep your money in a certificate for a longer period of time, Garden Savings pays you a higher rate of return.
What’s a Certificate ladder?
Certificate laddering is a simple concept: Divide the amount of money you have to save among certificates that mature at different times. As each certificate matures you can turn it over into a longer maturity certificate. In time, all your certificates will be earning a higher yield with a longer maturity. Because you have at least one certificate maturing regularly, you can always cash it in if you need the money.
A beginner’s Certificate ladder
A common certificate ladder would be as follows: If you have $1,500 to invest, deposit $500 into a one, two, and three-year certificate. Each year when a certificate matures roll the principle ($500) plus the dividends (interest made over the year, which varies depending on the interest rate) into a three-year certificate for a higher-dividend yields. Continue each year as your certificates mature, and reinvest them into a three-year certificate so all your money is earning a three-year rate.
If you’re starting with less you could invest smaller amounts into three, six, twelve; twelve, eighteen, or 25-month certificates. Again, the same principle applies, as each matures reinvest it for a longer term certificate until all your money is earning the highest rate.
Depending on your financial goals you can ladder any way you want. Garden Savings is currently offering a Promotional Certificate with a 25-month term at a rate of 2.00% APY* that can be utilized in your certificate portfolio mix. If you don’t get the chance to utilize our promotional term, that’s ok. We always offer Flex-Rate Certificates too. With our Flex-Rate Certificates, should the offered rate of the certificate chosen go up at any time during its term, you may exercise your option one-time during the term of the Share Certificate and bump up your rate to the higher rate. Contact us to find out more below.
Contact Us For More Information
Garden Savings Federal Credit Union
The local credit union in your neighborhood.
A Better Place to Bank.
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