Business and Personal Finance Dictionary

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• LADDERING
  
  By laddering, or staggering, the maturities on fixed-income investments, such as certificates of deposit (CDs) and bonds, you can set up a schedule for when various investments come due. That way, you can avoid having to reinvest all your money at one time, when interest rates may be low, and you can take advantage of new investment opportunities, including those with higher returns, as they become available. As each investment matures, you can reinvest that amount, use it for a preplanned purchase, or have it available to cover unexpected expenses. For example, instead of one $15,000, five-year CD yielding 5%, you can buy three $5,000 CDs maturing one year apart. Laddering is sometimes used in planning to pay for college expenses, with each investment coming due in time to pay tuition for that year.
  
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