Bond ladders, cd ladders - a question (rate, account, principle)

[ChessieMom]

For you guys that do these ladders, do you use the "ladder wizard" that your brokerage (or bank) offers, or do you select and buy them individually? Just wondering if there is any "best way" to do it - it's a new thing for me. My particular brokerage that I am using for this (TD Ameritrade) has a quirk in their CD ladder and it won't do the order, so if you want the same cds shown (as picked by the wizard), then you have to write the number down, and buy them individually. And of course there are a jillion others out there, so I was just wondering what criteria folks might use to select them (other than the obvious length of time, amount, and rate).

For instance, this one was shown at the top of my ladder (from the wizard) but it's just a 4.05 rate and there are certainly other 1 year cds that have a higher rate. Why would I pick this one, or why not? Just looking for some education here....thanks!

[rjm1cc]

No wizard

[BijouBaby]

I use the cd ladder wizard at Fidelity for a 1-year ladder consisting of 4 cds at staggered rates. They vet and offer the best cd choices according to your specs, then walk you through the purchase. Very simple and quick to use. I choose primarily based on interest rates, whether they are call-protected, and FDIC or NCUA insured. Typically, the first cd on their list offers the best deal.

[mathjak107]

Same , I let fidelitys automated ladder software do it

[ChessieMom]

Thanks… Just wanted to make sure there was no reason to not do it that way.

[LexingtonDad]

For those that use Fidelity's ladder wizard, do you roll the interest into your cash position or allow it to auto roll? And am I correct thinking that when for example the 3-month CD matures Fidelity takes the principle and interest and purchases another 3-month CD ($5000 + $43 interest = $5043) for $5043 at the then highest rate available?

[mathjak107]

I don’t auto roll …like now as the cds come due I put the money in 1-3 treasuries via the etf shy

[BijouBaby]

i auto-roll.

[GWoodle]

Originally Posted by LexingtonDad

For those that use Fidelity's ladder wizard, do you roll the interest into your cash position or allow it to auto roll? And am I correct thinking that when for example the 3-month CD matures Fidelity takes the principle and interest and purchases another 3-month CD ($5000 + $43 interest = $5043) for $5043 at the then highest rate available?

Reinvest maturing positions automatically with Auto Roll
During the CD Ladder construction process you will be asked to choose whether to have future maturing CD positions return
principal to your core account or to select the Auto Roll Service to have future maturing principal automatically reinvested in
another CD position equal to the longest maturity of the ladder. For example, in the case of a five year CD ladder with the
Auto Roll feature enabled, each maturing CD will be reinvested in CDs that mature in five years. If you select to have your
CD Ladder constructed with the Auto Roll Service enabled you will be asked to agree to the terms of the Auto Roll Service
Agreement and sign up for the Auto Roll Alerts Service. When CD rungs mature, the Auto Roll Service will automatically
search the Fidelity new issue CD inventory for the highest yielding new issue CD meeting your criteria at the time of the
search, with a settlement date within twelve calendar days following the stated maturity date of the Maturing Position, and
with sufficient quantity available.

In your example, at the start you bought 4 CD's, 3,6,9,12 months. In 3 months the first CD matures. If you do auto-roll the 3 month reinvests in a 12 month. Hopefully the 12 month has the highest of the 4. In this plan you have a CD maturing every 3 months.

[ChessieMom]

Originally Posted by LexingtonDad

For those that use Fidelity's ladder wizard, do you roll the interest into your cash position or allow it to auto roll? And am I correct thinking that when for example the 3-month CD matures Fidelity takes the principle and interest and purchases another 3-month CD ($5000 + $43 interest = $5043) for $5043 at the then highest rate available?

I did the auto-roll.