Tiered Deposit Method: The Perfect Trade-Off between High-interest Ballast and Liquidity

Instead of putting all the funds into the same maturity at once, it splits them into several parts and puts them into one-, two-, three-, or even five-year products. The purpose of this is to allow a portion of the funds to expire each year in the future.

Compared with single long-term time deposits, this method has significantly better liquidity; compared with all short-term time deposits, it can lock in higher medium- and long-term interest rates earlier.

Large amounts of funds are afraid of two things: first, they are all put in the short term, and the income is low for a long time; second, they are all locked for a long time, once there is a sudden demand for money, they can only be withdrawn in advance. The tiered deposit method strikes the right balance between the two.

The ladder structure is particularly suitable for family reserves, pension funds, and education funds, which tend to pursue stable returns while retaining some withdrawal flexibility.

Many people know to divide the deadline, but ignore the border between the bank and the security. If the amount is close to or exceeds the insurance coverage of a single bank, the ladder configuration is best done in conjunction with decentralized deposits, rather than only opening the bank for a period of time.

Another common problem is that the deadline is too mechanical. The really good ladder structure should be matched with the use of funds in the next 1-5 years, rather than a fixed template.