1 00:00:08,272 --> 00:00:08,772 Alright! 2 00:00:08,772 --> 00:00:12,710 Some extra cash, into the shoebox with you. 3 00:00:13,840 --> 00:00:14,635 Hey! 4 00:00:15,500 --> 00:00:16,850 Ms. Ham Ham! 5 00:00:16,850 --> 00:00:18,270 You scoundrel! 6 00:00:18,270 --> 00:00:19,960 What do you have to say for yourself? 7 00:00:19,960 --> 00:00:20,804 What? 8 00:00:20,804 --> 00:00:24,050 You know a shoebox isn’t the best place to keep your money, don’t you? 9 00:00:24,050 --> 00:00:26,880 If it’s just sitting there, why not grow it? 10 00:00:26,880 --> 00:00:30,951 I have some investments, but this always has to be safe, long-term. 11 00:00:30,951 --> 00:00:36,245 What if I told you there’s a safe way to make your sweet stash get even sweeter with time? 12 00:00:36,245 --> 00:00:39,160 Just like my aging horde of food pellets! 13 00:00:39,160 --> 00:00:41,128 Hahaha, yum. 14 00:00:41,128 --> 00:00:42,230 Go on. 15 00:00:43,114 --> 00:00:45,310 What do you know about CDs? 16 00:00:45,310 --> 00:00:48,890 Uhhhm, I “see dee” point you’re making? 17 00:00:48,890 --> 00:00:50,260 But not really. 18 00:00:50,260 --> 00:00:53,350 A CD is a Certificate of Deposit. 19 00:00:53,350 --> 00:00:57,209 When you buy a CD, you make a deposit with a financial institution, 20 00:00:57,209 --> 00:00:59,280 and they hold it for a fixed amount of time. 21 00:00:59,280 --> 00:01:03,760 Then at the end, on the maturity date, they pay you back with a guaranteed percentage 22 00:01:03,760 --> 00:01:06,189 of interest added to your initial investment. 23 00:01:06,189 --> 00:01:10,320 Basically, you sacrifice the liquidity of your cash for safe earnings. 24 00:01:10,320 --> 00:01:14,549 Generally, the longer the term, the more interest your money will earn. 25 00:01:14,549 --> 00:01:16,600 But what if I really need the money? 26 00:01:16,600 --> 00:01:20,200 If you want more access to funds, try a laddering strategy! 27 00:01:20,200 --> 00:01:23,470 Like, climbing rungs, circus performance laddering? 28 00:01:23,470 --> 00:01:25,100 Pretty much! 29 00:01:25,100 --> 00:01:31,768 If you have $5,000 to invest, first divide it into equal parts – say, five parts of $1,000 each. 30 00:01:31,768 --> 00:01:36,222 Then you buy a CD with a one-year term, another with a two-year term, 31 00:01:36,222 --> 00:01:39,360 then a three-year, four-year and five-year term. 32 00:01:39,360 --> 00:01:43,670 When your first year is up, unless you really need the money, you can take the balance from 33 00:01:43,670 --> 00:01:47,850 the one-year CD and reinvest it as another five-year CD. 34 00:01:47,850 --> 00:01:52,600 From that point on, you keep reinvesting in five-year CDs every year. 35 00:01:52,600 --> 00:01:57,320 That way, you can have access to part of your money each year as one of your CDs matures, 36 00:01:57,320 --> 00:02:02,657 while at the same time taking advantage of the better rates for longer-term CDs. 37 00:02:02,657 --> 00:02:04,090 But don’t the rates fluctuate? 38 00:02:04,090 --> 00:02:05,829 How do you deal with that? 39 00:02:05,829 --> 00:02:06,829 Very true. 40 00:02:06,829 --> 00:02:12,866 You will find lots of options for term lengths and interest rates when you shop around for CDs. 41 00:02:12,866 --> 00:02:16,550 If you think interest rates are about to rise, then you should keep the term lengths for 42 00:02:16,550 --> 00:02:21,260 your CDs shorter, so that you can take advantage of higher rates on your next CD purchase. 43 00:02:21,260 --> 00:02:26,094 If you think interest rates will fall, then you should invest in longer-term CDs 44 00:02:26,094 --> 00:02:28,923 and lock in the higher interest rates right now. 45 00:02:28,923 --> 00:02:32,820 Alright, time to climb the CD ladder to success! 46 00:02:32,820 --> 00:02:38,980 Yes! Keep in mind there are also callable CDs, which may offer higher rates, but the financial 47 00:02:38,980 --> 00:02:44,530 institution can choose to redeem or call away the CD prior to the maturity date, which usually 48 00:02:44,530 --> 00:02:46,769 happens when interest rates suddenly drop. 49 00:02:46,769 --> 00:02:47,769 Good to know. 50 00:02:47,769 --> 00:02:49,780 I’d better get started this instant! 51 00:02:49,780 --> 00:02:50,780 Yeah! 52 00:02:50,780 --> 00:02:55,556 But…can you wait until tomorrow to get started on that CD? 53 00:02:55,556 --> 00:02:56,379 Ahhhhh. 54 00:02:56,379 --> 00:02:57,144 What? 55 00:02:57,144 --> 00:03:00,288 You never wanted to sleep on a bed made of cash? 56 00:03:04,958 --> 00:03:05,871 Ahhhhh. 57 00:03:05,871 --> 00:03:07,730 OK, this is pretty great.