Savers are often tempted to invest in longer-term CDs because they usually yield more than short-term ones. The risks of investing in long-term CDs are that you’ll run into an emergency and need the money before the CD matures or that interest rates will rise and you’ll be stuck in lower-yielding CDs.

You can reduce these risks by creating what’s known as a CD ladder. It involves buying CDs of various maturities. When one matures, you reinvest in the longest-term CD.

For example, you might put $5,000 in a six-month CD, $5,000 in a one-year CD, $5,000 in a 2.5-year CD and $5,000 in a 5-year CD. When the six month CD matures, you roll the proceeds in another 5-year CD. At that point, your one-year CD will be maturing in six months, so you’ll have money becoming available soon if you need it. You can choose any terms you like based on your anticipated cash needs.