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Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 79817  
Subject: Re: Corporate vs Treasury Bonds Date: 8/5/1999 11:43 PM
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WilliamLipp asks,

intercst Date: 8/5/99 11:11 PM Number: 12873
I have a "5 step" bond ladder equal to 5 years worth of living expenses. I had been using US Treasury notes. But now that 5-year CDs yield about 1% above 5 year Treasuries, I'm replacing the Treasury notes with CDs as they mature.

I assume this is bonds maturing 1 year apart, each with about one year's living money. Have you considered stretching it to 10 steps, each with 1/2 year living money. You would get each year's money partly from selling stock this year and partly from the maturing bond, buying 10 year bonds instead of 5 year bonds. Longer duration bonds tend to pay higher interest rates, so it seems to me this could boost your yield a bit.

The small difference in yield between 5 and 10 year notes isn't attractive enough to me to tie up my money for 10 years. (But reasonable people can differ on that assessment.)

If I still believe in Harry S. Dent's prediction of a prolonged recession/depression starting in the year 2008, I might put as much as 50% of my portfolio in 30 year Treasuries starting in 2006. We'll see.

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