If you depend on SCAs for income or just want to maximize your SCA yield while maintaining some flexibility, laddering could be an effective strategy.

Longer term SCAs frequently (but not always) offer higher yields than those with shorter terms, but if you invest all of your funds at the longest term, you might miss out on higher yields in the future. However, if you are fully invested at the longest term and interest rates decline, your SCA yield is protected. The difficulty is in knowing which direction interest rates are going to move. Laddering provides a hedge against sharp interest rate swings while allowing you to reap the potential benefits of longer term interest rates. It also provides you the option of reinvesting or withdrawing a portion of your deposit in shorter-term intervals. An SCA Ladder is built by opening several SCAs simultaneously, each with successively longer maturity dates. As each SCA matures, you would roll it over into a new SCA with the longest maturity term in your ladder until all of your money is deposited at the longest term.

Building an SCA Ladder is easy. For example, you could take a $40,000 investment and divide it evenly into four SCAs of successively longer terms (one each for 12, 24, 36 and 48 months). Each year, one of the $10,000 SCAs will mature, which you would then reinvest in a new 48-month SCA to maintain the ladder. The liquidity period in this example is one year; as long as the ladder is maintained, a portion of funds will become available every 12 months. This strategy allows you to maintain the potentially higher yields on longer-term SCAs, while each maturing SCA will provide an opportunity to reinvest at the current yield. Of course, if unexpected cash needs present themselves, then funds could be taken from any one of the four SCAs when they mature (once a year for the first four years).