No. of Recommendations: 2
Agreed buying short bonds in a formal initial bond ladder is costly and gets you not much yield these days.

One way around the problem is to build your initial ladder by buying your longest bond again and again over the lenght of the ladder at appropriate intervals. Hence, a 10 yr ladder at 2 yr intervals can be constructed in 10 years by buying a new 10 yr bond every two years for ten years.

The yield curve tells you that yields fall for shorter bonds. This way you buy the high yield end and then earn capital gains--at least on paper--as the market values increase with shortened maturities.
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