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#1
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CD Interest Rates and Lengths Comparisons
I'd like to do some laddering with CD's, and wonder if there's a template out
there that is set up to show the return I'd get with different rates and for 3, 6 and 12 month periods. |
#2
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Montana Trainer wrote:
I'd like to do some laddering with CD's, and wonder if there's a template out there that is set up to show the return I'd get with different rates and for 3, 6 and 12 month periods. I do not know about an Excel template, but I did not find a calculator at bankrate.com that might serve your purpose. Go to http://www.bankrate.com/brm/savings-.../cd-ladder.asp , and read http://www.bankrate.com/brm/news/sav/20010521b.asp . |
#3
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Montana Trainer wrote:
I'd like to do some laddering with CD's, and wonder if there's a template out there that is set up to show the return I'd get with different rates and for 3, 6 and 12 month periods. If the bankrate.com calculator is something like what you are interested in, the following "template" might work for you. A1, A2, etc = CD investment for each rung B1, B2, etc = the maturity period of each rung, in months C1, C2, etc = annual interest rate for each rung D1, D2, etc = FV($C$10/2,($B$10-B1)/6,,-FV(C1/2,B1/6,,-A1)) where $C$10 is the interest rate for the last rung, and $B$10 is the maturity period of the last rung. For example, the following mimics the result of a 5-rung ladder with 1-year maturity periods computed by the bankrate.com calculator. A B C D 1 $5000 12 4.40% $6,298.74 2 $5000 24 4.45% $6,283.98 3 $5000 36 4.45% $6,266.19 4 $5000 48 4.45% $6,248.45 5 $80000 60 4.74% $101,115.33 6 $100000 $126,213.00 (sum) Notes: 1. bankrate.com uses uneven CD investments to ensure that $5000 is available every 1 year while maximizing your return, assuming that the last rung offers the highest interest rate. Alternatively, if dollar cost averaging is your goal, you might use equal amounts -- $20,000 in this case. 2. bankrate.com compounds every 6 months. Most CDs compound daily. In the FV() function, you might replace "/2" and "/6" with "/360" and "*30" respectively. 3. The FV() function assumes that when each CD matures, its appreciated value is reinvested in a CD with the maturity and current interest rate of the last rung, since the future interest is unknown. |
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