I agree with your analysis, but don't assume that 3.5% is a cap. In 2 years it could be 7%, who knows.I wonder if it is worth tying your money up for extra 1%. I agree rates could be anything but I would rather earn 5%+ while waiting. If rates went to 7% I would cash in the 5 yr CD and buy the 7% CD. The money is not tied up. Yes I would loose 6 months interest but I'm still way ahead of shorter term CD's. From my calculations, if one has a lump-sum to invest, 5 yr 5% CD's are best, shorter term or laddering produces less of a return no matter what rates are in the future. That's what I do, hoping I didn't make a mistake in my spreadsheets.
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