Bond ladder strategy: 5 things to know

1.Invest in bonds that have staggered maturity dates, with a range of maturities from short term to long term.

2.As each bond matures, the investor can reinvest the proceeds into new bonds with a similar maturity date.

3.This strategy provides a predictable cash fl ow stream and reduces the interest rate risk associated with investing in bonds.


4.A bond ladder allows investors to diversify their fi xed-income portfolio by investing in bonds with different maturities, issuers and credit ratings.

5.It is used by investors who want to generate income from their investments while preserving their capital.

Content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.