No. of Recommendations: 2
Don,

I completely agree with your critique of the article for using data in a falling interest rate environment. But I think there is an important underlying point, namely that waiting for interest rates to go up is usually a losing strategy. Especially now with low interest rates, we hear a lot: keep with low maturities and invest in longer maturities when rates go up.

I don't know how the numbers crunch with 10 year maturities or 20, but I have crunched them for 5-year CDs (though not since they got below 4%). What I found was that in most scenaros, including gradually, moderately rising interest rates, you are better off buying the 5 year CD than buying a ladder of 1,2,3,4,5 and rolling over into higher rate 5 year CDs. The lower interest rates you are getting for the shorter CDs isn't compensated for by being able to roll over to higher rates. The only time this isn't true is if rates go up considerably, quickly, or both.
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