The barbell ladder — the best of both worlds
A barbell ladder divides funds between a long-term certificate and a short-term certificate or a mini ladder. Depositing funds among the two ends of the certificate term spectrum with nothing in the middle gives this ladder its name.
For example, take that $5,000 you were going to put in a traditional ladder. With a barbell ladder, you’ll put $2,500 in a five-year certificate. Next, you could put the remaining $2,500 in a single short-term certificate, say one with a six-month term, or you could create a mini ladder by placing $625 in 3-month, six-month, nine-month, and 12-month certificates.
If you have a single short-term certificate, reinvest in another short-term certificate on maturity or, if you chose the mini ladder, continue with new 12-month certificates.
With the barbell ladder, half of your money will be in a long-term account, hopefully earning the best rate, while the other half will be in short-term accounts, giving you frequent access to that portion of your funds.