The Motley Fool: Climbing the CD ladder

Ask the fool

A safety ladder for CDs

Q: What does it mean to "ladder" CDs? - G.S., Stockton, Minn.

A: It's an investing strategy that's especially handy in our current environment of ultra-low interest rates or whenever you expect rates to rise. Imagine that you have $30,000 that you want to put in certificates of deposit, but you're put off by their low interest rates. You can instead put, say, $10,000 of your money in a one-year CD, $10,000 in a two-year CD and $10,000 in a three-year one. As each investment matures, you can reinvest it in a new CD, which may be offering a higher rate by then. This way, you're not locked into low rates for a long time.

On the other hand, if you're expecting rates to drop over the coming years, consider locking in current rates by buying long-term CDs.

foolish trivia

Name thatcompany

Founded in 1910 by a Nebraska teenager with two shoeboxes full of postcards, I'm now a $4 billion business, based in Kansas City, Mo. My cards and other products are printed in more than 30 languages and sold in more than 100 countries through more than 40,000 retail outlets. I introduced modern gift wrapping in 1917, around the time I started printing my own valentines and Christmas cards. I'm also known for my television programming and cable TV channels. In 1984 I bought the Crayola company. I'm privately owned, so you can't buy stock in me. Who am I?

Last week's trivia answer: Starwood Hotels and Resorts

the take

A Wynn-Win proposition

Certain beaten-down stocks can make great long-term investments, and Wynn Resorts (Nasdaq: WYNN) seems likely to be a good example. Its stock was recently down about 26 percent over the past year, and its fortunes may be turning around in the coming year or so.

Part of its problem has been weak performance in the Chinese gambling hot spot of Macau, which should be growing at a much faster pace than Wynn's Las Vegas operations, but the two have reversed roles lately. Its Las Vegas operations posted a solid 9 percent year-over-year revenue gain in the third quarter, followed by a 6 percent drop in the fourth. Revenue from Macau, though, dropped 6 percent in the third quarter and a whopping32 percent in the fourth.

The fourth quarter saw a huge 40 percent drop in VIP gambling volume in Macau, so it bodes well that Wynn has been shifting its focus more toward mass-market gamblers - of which there are many as China's middle class grows.

Wynn is also building a new casino in Macau's fast-growing Cotai region. Opening in 2016, the new Wynn Palace could boost the company's top and bottom lines significantly.

Its strategic maneuvers will take awhile to deliver meaningful results, but Wynn Resorts is offering patient believers a dividend yield recently near 4 percent.

Given that, and a currently deflated price, the stock looks like a Wynn-win proposition.

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