"IMHO, If you consider current interest rates and stage of recovery/bond cycle, this would not be good time to lock in duration or credit risk in fixed income or a ladder."Good point, Orim. Its not a good time to buy a bond ladder either. However, the ladder does give you dollar averaging of interest rates over time and you do get your principle back at maturity. Hence, you avoid the cash losses caused by rising interest rates.The tough part is funding the whole ladder at one time when rates are extremely low. Better would be to fund the bond ladder gradually by investing in a 5 year bond every year. This spreads the interest rate risk over 5 years. But then, where do you park the funds you are waiting to invest? In money markets? In stocks?Best is make an overall assessment of the returns and the risks before you decide the right combination for you.
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |
BATS data provided in real-time. NYSE, NASDAQ and NYSEMKT data delayed 15 minutes.
Real-Time prices provided by BATS. Market data provided by Interactive Data.
Company fundamental data provided by Morningstar<