Automatic CD Wheel Mechanism for Liquidity and Yield Trade-off
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Solution Overview
Problem
Consumers face difficulties in accessing their money invested in Certificates of Deposit (CDs) before maturity, leading to a lack of investment in this secure and interest-bearing option due to the inability to withdraw funds without losing benefits.
Innovation Solution
A system and method for automatic CD investing, where a CD wheel mechanism allows for periodic investments and withdrawals, enabling investors to access funds as each CD matures, while maintaining the benefits of longer-term CDs through a networked computing environment and automated processes.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If consumers invest money in Certificates of Deposit (CD) for a fixed term, then they receive security and higher interest rates, but they cannot access their money before maturity
Solution Approach 1:
The patent segments a single large CD investment into multiple smaller CD investments with staggered maturity dates. Instead of one locked-up CD, the system creates multiple CDs (e.g., 5 CDs of $2,000 each maturing on different dates), allowing the investor to access portions of their funds at different times while maintaining the security and interest rate benefits of CD investments.
2Ease of operation
If consumers withdraw money from CD before maturity, then they can access their funds, but they lose the benefits of the CD
Solution Approach 1:
The system performs preliminary action by pre-structuring multiple CDs with different maturity dates before the investor needs to access any funds. This allows the investor to access only the matured portions when needed, avoiding early withdrawal penalties on the entire investment and preserving interest rate benefits on the remaining locked funds.
3Reliability
If consumers invest large amounts in CD, then they achieve better interest rates, but they cannot access any portion of the money before maturity
Solution Approach 1:
The patent divides a large investment amount into multiple smaller CD units, each with its own maturity schedule. This segmentation maintains the advantage of investing large amounts (qualifying for better interest rates) while providing flexibility to access different portions at different times based on the staggered maturity dates of the individual CD units.
Data Source
AI summary
A system implemented on one or more computer processors may comprise at least one subsystem configured for automatically purchasing a first certificate of deposit for an investor for a specified amount of money having a predetermined term, at least one subsystem configured for waiting a predetermined period of time no longer than the term of the first certificate of deposit, at least one subsystem configured for automatically purchasing another certificate of deposit for an investor for the specified amount of money and having the same predetermined term, at least one subsystem configured for repeating actions for which each subsystem above is configured until a second specified amount of money has been spent.