Need practical steps to build a bond ladder

[UpQuark]

I've watched YouTube videos on how to build a bond ladder, and they make it look easy to start out with different durations then have them all renewing and coming available on a regular schedule.

But now that I want to build a ladder there are no new issue treasury bonds showing up in Fidelity (there were three earlier today but now nothing shows up, including nothing for TIPS even though when I google auctions it sounds like a 5 year TIPS should be offered today?).

How does a person build a bond ladder in real-life, do you buy one type/duration when it is auctioned then have to wait a month or two to select the next duration bond? Won't that leave gaps all over the ladder?

Is there a time during the year that all the types and durations are available at the same time? If so maybe I should put my little pot of money in a secondary treasury that would mature prior to the auction time?

 

[njhowie]

There is no need to purchase new issue treasuries - there are plenty available in the secondary market, and I think it is better/easier than going through new issue/auction.

Decide what term you're looking for, go to Fidelity's fixed income page here:
https://fixedincome.fidelity.com/ftgw/fi/FILanding

Then click on the entry for US Treasury under the maturity you're looking for. Find what you want, and buy instantly - no commissions on purchase or sale.

Here's the link for secondary market TIPS at Fidelity:
https://tinyurl.com/46c22wws

 

[daylatedollarshort]

Here is a tentative Treasury auction schedule for 2022 - TentativeAuctionScheduleQ32022.pdf (treasury.gov). I sign up for Fidelity's fixed income alerts emails to get notified about TIPS auctions.

 

[COcheesehead]

If you use Fidelity they have a bond ladder builder tool or you can call their bond desk and they will build one for you.
I own over 180 individual bonds and I built that over time as I had cash. It took me years to get to this point.

 

[UpQuark]

Thanks for the responses, I looked at that schedule and looks like if I am patient for a few weeks all the t-bill durations will be offered at about the same time so maybe a ladder would be easier to create then. I hope they have an option to auto-reinvest.

Tho now I'm not sure whether t-bills or longer duration t-notes are better for a ladder in my trad-IRA. Or if maybe I should put all the money into TIPS instead.

And on that schedule they have a floating rate note, I'd never heard of those, now I don't know if that is better or worse than a fixed rate?

I really don't like the idea of bonds except as a place to put cash to use for the next two or three years (maybe 5 years max). But I'm trying to follow the AA guidelines and force myself to move a portion of my investments into bonds.

 

[UpQuark]

If you use Fidelity they have a bond ladder builder tool or you can call their bond desk and they will build one for you.
I own over 180 individual bonds and I built that over time as I had cash. It took me years to get to this point.

I can't get the Fidelity bond tool to work for me and when I called them a couple days ago they couldn't get it to work either (in my IRA account) (looked like it might work in my taxable account but that wasn't where I wanted to be).

 

[UpQuark]

There is no need to purchase new issue treasuries - there are plenty available in the secondary market, and I think it is better/easier than going through new issue/auction.

Decide what term you're looking for, go to Fidelity's fixed income page here:
https://fixedincome.fidelity.com/ftgw/fi/FILanding

Then click on the entry for US Treasury under the maturity you're looking for. Find what you want, and buy instantly - no commissions on purchase or sale.

Here's the link for secondary market TIPS at Fidelity:
https://tinyurl.com/46c22wws

Yes, I really like the secondaries, but the ones I've purchased mature at oddball dates (and can't auto-renew). I'm hoping if I buy the auction items they'll march along with a disciplined order of payout/duration and auto-renew (I'm not sure whether that will be an option tho).

 

[COcheesehead]

I can't get the Fidelity bond tool to work for me and when I called them a couple days ago they couldn't get it to work either (in my IRA account) (looked like it might work in my taxable account but that wasn't where I wanted to be).

You could still make note of the cusips and buy them in the other account.

 

[daylatedollarshort]

I'm buying both short term Treasuries and TIPS. TIPS real yields are pretty good right now and rising. They were negative in recent years, so having them go to into the 1.5% to 2% real yield range has been a good buying opportunity for us. Treasuries will do better with deflation, TIPS with inflation, so I like having a mix.

 

[COcheesehead]

My bond ladders around the first of the year were throwing off about $100k annually. Through reinvesting maturing bonds and flipping out of low yielders, as of today they now throw off just under $160k annually.
There are too many good deals in bond land, it’s crazy.