The rising rate environment and inflation we’ve been experiencing has been at the forefront of everyone’s minds for the better part of this year, and understandably so. Living in a world that’s increased costs on practically everything can inflict a great deal of stress on you, your budget, and your wallet. But amidst all of the madness surrounding increased rates, there is one product that these rate hikes have affected in a positive way as of late, thus, allowing it to make its way back into the spotlight: share certificates.

Over the last couple of years, much in part to the pandemic, share certificate rates took a nosedive. As they continued to steadily decrease since 2020, it made them less than appealing for consumers to buy into. But fast forward to where we currently stand, and you’ll see that share certificates are making a huge comeback.

If share certificates have piqued your interest before but you’re still feeling a little unsure about whether they’re the right investment choice for you, let’s talk about it!

What is a Share Certificate?

First things first, let’s explore the definition of a share certificate before we get into the real nitty gritty of this blog. A share certificate is the credit union’s version of a certificate of deposit, or CD, that you’d receive from a bank. Share certificates are intended to help you plan to have a successful future, maximize your savings, and accomplish any goals you’ve got on the horizon.

Benefits of Share Certificates

Unlike the stock market, which can prove to be a much riskier investment, share certificates are very low risk and provide you and your financial picture with more stability. Best part? Share certificates earn you dividends, more commonly known as interest, at a guaranteed rate of return compared to a standard savings account.

The biggest requirement you’ll want to be aware of is the fact that you’ve got to leave your money alone for the agreed-upon term. As long as you don’t withdraw your funds (withdrawing before the certificate matures would result in a significant penalty and would keep you from earning the full benefit), you’ll be able to witness your funds grow over time and can calculate the dividends you’ll earn upon your certificate’s maturity date.

At GOLD, we’ve got excellent term options ranging from 6 months to 5 years and your yield will not fluctuate depending on the market conditions. To get started, you’ll only need a minimum of $500 to open your certificate. Keep in mind, though, that the initial deposit is the only one you’ll be able to make, so you should be comfortable with the amount you choose to deposit from the get-go. Additionally, the money you deposit will be federally insured up to $250,000 by the National Credit Union Administration (NCUA).

Many debate whether or not taking the leap into the certificate world is worth it, and here’s why. It comes down to the fact that your money will be tied up over a period of time (the exact amount will depend on the term you choose). The best certificate rates have the longest terms, but you may not feel 100% comfortable tying up a large sum of money for a long term. But sticking with a shorter-term certificate means getting a lower return on your investment. So, what’s the answer? Certificate laddering.

Build a Certificate Ladder

Certificate laddering can take your savings to new heights. But wait, what exactly is a certificate ladder, you ask? Let’s dive right in.

Certificate laddering means dividing your total money up into equal amounts and investing it into multiple certificates at the same time with varying terms. For example, rather than putting $10,000 into a single certificate, you can split that money up into a total of five short- and long-term certificates starting at one year to five years that are equal amounts at $2,000 apiece. Sure, your interest rate won’t be as high as it would be if you were to put everything into the 5-year certificate, but the blended rate of each of the terms combined is still very good and won’t tie your funds up for 5 whole years. Plus, when you stagger your certificates’ maturity dates, it means that one will mature every year, which will help you to maintain financial flexibility and allow your funds to become more readily available.

Splitting your investment into equal amounts isn’t the only way you can build your ladder, though. It’s up to you to decide exactly how much money you’d like to put into each. Perhaps you want to deposit a higher amount into the term with the best rate, so you may want to split your original $10,000 up by putting $5,000 into the 5-year certificate, $3,000 into the 3-year certificate, and $2,000 into the 1-year certificate. Or maybe you want to put a larger amount into the certificate with the shortest term, so that way you’ll have more money available at the first maturity date.

The options are endless, and there is not one correct answer. You’ve got to do whatever you’re most comfortable with and what works best your personal financial situation.

Start Maximizing Your Savings

Ready to get started? GOLD is standing by and ready to help you diversify your investment portfolio today!

Check out our competitive rates, open your share certificate at GOLD for as little as $500, keep your money in there for the term(s) you’re interested in, and watch your assets grow quickly and securely. Give our team a call to get started: 484-223-4200

Cheryl Bartholomew

Cheryl Bartholomew

Cheryl has been the President & CEO at GOLD since 2009 and has over 39 years of banking experience. She ensures the happiness of all Members through positive experiences that exceed their expectations, regardless of whether it's a simple phone call, electronic transaction, or face-to-face interaction. She strives to provide a positive work environment for her employees so they continue to go above and beyond for Members. She works closely with Member Volunteers (Board of Directors and Supervisory Committee) and makes sure they feel appreciated for their contributions in setting up our Members for success. Cheryl believes that all Members can be empowered to take control of their financial well-being, and she's proud to say that we at GOLD are confident in helping them do that.

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