How I Made $5000 in the Stock Market

A CD Ladder Is the Right Step for These Young Workers. Here’s Why.

Oct 11, 2025 04:00:00 -0400 | #Financial Planning

Young workers can use ladders to save money for a house down payment. (Dreamstime)

Key Points

Financial advisor Thomas Rindahl recently worked with a 20-year-old client who had inherited $50,000 from her grandmother. The college student has decades before retirement, but Rindahl didn’t put the money in the stock market—the usual choice for young investors.

Instead, he set his client up with a certificate of deposit ladder consisting of four bank CDs funded with around $12,000 each. The ladder in place is set to mature in about one year, and extend out every quarter until the client is ready to start using the funds. While the client was willing to put some $2,000 in stocks, she wanted to keep the majority of the money safe in part to pay off her student loans once she graduated college.

Unlike stocks or even a long-duration bond, a CD ladder will give her guaranteed income as it matures. “It allows much more flexibility for you as a saver to have access to your cash on a systematic and periodic basis,” explained Rindahl, who is based in Tempe, Ariz.

For many young investors, an emergency fund, all stock-portfolio and regular contributions to a retirement savings account such as a 401(k) does the trick when it comes to investing. But laddering can be ideal for investors who are saving for short-term goals or have a lower risk appetite in the face of economic uncertainty.

The strategy entails dividing the cash you want to put to work into equal parts, and investing it in assets with varying maturity dates. Say you want to invest $25,000 in a five-year ladder. You would invest $5,000 in one-year CDs, and that same amount in two-year, three-year, four-year and five-year CDs. As the CDs mature, you would take that money and—if you don’t need it at the moment—put it into CDs maturing in five years. You can keep doing this indefinitely.

The move is especially appealing when interest rates are high, as they have been in recent years. Currently, Treasuries and CDs are yielding above 3%, and even above 4% in some cases. But while those yields aren’t nearly as attractive as what you would expect to see in the stock market over time, Nick Srmag, senior portfolio manager and managing director at MAI Capital Management, says laddering can help diversify a portfolio and provide safety in an environment like today’s when equities are trading at lofty valuations.

“Say you’re saving for a house or a car and you don’t want to take on equity-like volatility because of that shorter time horizon,” Srmag says. “Fixed assets can make more sense because of the predictable outcome they create.”

Hillary Stalker, a financial advisor at CapWealth in Franklin, Tenn., says she tends to recommend laddering for young investors who know they have a large purchase coming up. Most recently, she was working with a couple in their mid-30s who had recently had their first child and were trying to purchase their first home. While they had the money for a down payment, they didn’t know exactly when they would find their dream house. So she created a Treasury bill ladder with T-bills maturing over the next three, six, nine and 12 months.

“They wanted to earn more yield on their savings than what they were getting at the bank, but they also were afraid of putting it inside the CD because of the surrender penalty,” Stalker says. “A Treasury bill ladder was the perfect way to accomplish their goal because it was going to earn a yield somewhere between 4 and 4.5% at the time, but it also can be traded on the open market without a surrender penalty.”

Every time their T-bills matured, they reinvested that money in another T-bill. In the end, it took them over a year to purchase their home—and they were able to do so with peace of mind because of the laddering strategy.

She says it’s not uncommon for young people to have a goal like purchasing a home but not knowing exactly when that will happen. Laddering offers flexibility.

“By laddering at different maturities, they have the opportunity of capturing that yield at a three-month mark, a six-month mark, a nine-month mark, up to a year, and that gives them different opportunities for their funds to mature,” Stalker says. “If they’ve decided to not purchase that home yet, then we can have another conversation about what to do with that cash and the interest paid moving forward.”

With economic uncertainty rising—especially in the face of the government shutdown—laddering can allow young savers to earn interest without losing sleep.

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