5 things to know about income laddering

1.It is a technique of buying multiple fixed income products, each with a different maturity.
2.When a product matures, monies can be reinvested in a new product with highest yield in the available time horizon.
3.In a rising interest rate scenario, the maturing principal can be reinvested at higher rates.
4.By staggering maturity dates, investors avoid getting locked into a single interest rate.
5.The laddering reduces risk and provides a predictable cash flow with adequate liquidity.


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