For most investors there is an element of anxiety that comes with the risk of loss or the possibility of missing the best interest rates. This is especially true in a low-rate environment, when future rates are often hard to predict. One method to help stabilize investing, while still maintaining the opportunity to invest during higher rate periods, is called CD Laddering.

With CD laddering, you buy a number of CDs for different terms. For example, if you have $40,000 to invest, you wanted to spread your investments out over 4 years, you would buy 4 $2,500 CDs with terms of one, two, three, and four years. When your 1-year CD matures, you roll it over into a 4-year CD and so on. This way, you get the most of your money into higher-yielding CDs, but every year one CD matures, so you have access to part of your investment.

By always replacing the longest maturity, you’ll reap the benefit of getting the highest rate. You’ll also be reinvesting only a portion of your funds when funds are low. This will even out the high and low rate fluctuations in the market.