How to use laddering to make the most of your fixed income investments
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What is laddering?
It is a technique of buying multiple fixed-income products, each with a different maturity.
Text: Centre for Investment Education and Learning (CIEL).
Text: Centre for Investment Education and Learning (CIEL).
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How to use laddering to get a better return
When a product matures, monies can be reinvested in a new product with the highest yield in the available time horizon.
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Keep this in mind
In a rising interest rate scenario, the maturing principal can be reinvested at higher rates.
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Benefits of laddering
By staggering maturity dates, investors avoid getting locked into a single interest rate.
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Take a note
The laddering reduces risk and provides a predictable cash flow with adequate liquidity.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)