Bullets, barbells and CDARS for your CD’s

There are many ways to manage your investments, one of the most popular being buying certificate of deposit or a CD. But not all CD’s are created equal nor do you have to approach every CD purchase with the same strategy each time.

Here are some strategies you might have yet to consider.

Strategy bullets

With a bullet strategy, you stagger purchases of CDs but make sure they all mature around the same time. By staggering the purchases you reduce the risk of buying all the CDs when rates are at their lowest…a good strategy when you're saving money for a specific goal such as college or a new future big purchase-like a car-you know you’ll need money for in four or five years.

Strategy barbell
The barbell strategy allows you to take advantage of high yields at some point on the yield curve while hedging your bet at another point. Balancing your investment you use some money to buy CD’s with longer maturities paying the best interest, and spend the rest of your money on short-term CD’s allowing some liquidity and the advantage of possible rate changes.

Strategy CDARS
Normally, bank deposits are insured up to $100,000 by the Federal Deposit Insurance Corporation, or FDIC, and up to $250,000 in the case of retirement accounts. CDARS, a deposit placement service, gives you a way to invest more than $100,000 in CDs, with the full amount insured. Certificate of Deposit Account Registry Service, is run by Promontory Interfinancial Network. Banks that subscribe to CDARS can give individual CD buyers up to $10 million in FDIC coverage.

There are approximately 700 banks across the country offering CDARS.

The bullet, barbell and CDARS are just a few ways to approach your CD investment. It’s your money, be smart when using it to make you more money.