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The problem with Cds, however, is liquidity, and having some huge CD coming due every 5-years and nothing in the interim can be a liquidity problem. So, sometimes it is necessary to eat the lower returns while you create a ladder of 5-year Cd's to solve the long term liquidity problem.

Yep, buying a big one and dumping it around the first year is not good. (Could it be that one is compensated for this risk by being right two out of three times [see original post]?) But after that approximate one year it is smooth sailing. Over time the extra interest accumulated from the 5 year Cds increases faster then the "ladder of different maturities" but the early withdrawal penalty stays fixed.

Yes buying one huge CD would force one to take an unnecessary hit if some of those funds were needed, good reason to always buy multiple small Cd's, even if it is a pain.

(one who didn't do the right thing while accumulating funds and can't stand the medicine)
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