|
If you are setting up a ladder, say 5 years, with equal amounts each year, when you begin, you will have some maturities that are lower in rate. The trade-off is that at maturity, you can reinvest at the then current rate for 5 years out. I've been doing this since 2001, and it feels safer than bond funds. Over longer periods of time, your average rate will lag the current 5 year rate, either lower in times of rising interest rates, or higher in periods of falling rates.
Laddering assumes no need for the funds between maturities.....
|
Linear Mode
