Save more with this strategy!
At times, saving more is easier said than done. Thankfully, there are plenty of financial strategies and solutions available to help everyone achieve their specific money goals.
In this article, we’ll explore the benefits of having a certificate and introduce you to an approach for how to maximize your savings with them.
What is a savings certificate?
A savings certificate is a type of long-term savings account that has a fixed interest rate and a fixed date of withdrawal, otherwise known as the maturity date. They have a variety of term lengths, ranging anywhere from three months to five years. The longer you leave your money, the higher the interest rate will be!
Why should I open a certificate?
They are a great solution if you have a larger sum of money that’s sitting in an account that you may not need to access for a while. You can guarantee a higher interest rate, which means your money will grow faster over the certificate term!
For example, if you know something is coming up in three years – say an anniversary trip, honeymoon, or a child’s tuition – you can take a lump sum, put it in a 36-month account, and enjoy a guaranteed rate of return while you continue to make plans!
How to maximize your savings certificate strategy
Ready to learn how to maximize your savings? If you’re already familiar with these accounts, or maybe you want to go for gold from the start, we have a pro tip for you. It’s called certificate laddering.
Now don’t worry – it’s not as difficult as it might sound! Most people start with a five-year laddering plan. For example, if you have $10,000 to invest, you could put $2,000 in five separate accounts with varying terms:
- $2,000 for 12 months
- $2,000 for 24 months
- $2,000 for 36 months
- $2,000 for 48 months
- $2,000 for 60 months
After the first one matures, you can reinvest that money into a new 60-month certificate. When the next one matures, you do the same thing, reinvesting the money into another new 60-month account.
By following that pattern, you’ll eventually have all five in 60-month terms, maximizing your interest! You’ll also give yourself more flexibility, because you can either continue re-investing in another 60-month account or wait until one matures and move the balance to your checking account.
And there you have it – a step-by-step guide on how to maximize your savings certificates! So, are you ready to get started? Check out our savings certificate rates or open your certificate(s) today!