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10-03-2022, 08:07 AM
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#1
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Moderator
Join Date: Nov 2014
Posts: 9,070
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Building a ladder.
I’m thinking about building a ladder using Treasury Notes/Bills. My general thought is to buy a 3, 6, 9 and 12 month duration and then as each matures buying a 12 month to replace it. Basically setting up a ladder that matures quarterly. However, in reading some of the threads on fixed income recently it seems there are those that are buying every week or couple weeks.
My question is, what is your framework for your ladder(s). What kind of rungs do you have and what’s your goal in doing so. Trying to see if I’m missing something before I start my foray into owning actual bond versus a bond fund. At this point, I don’t think I’d want to go any longer than one year for duration.
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10-03-2022, 09:03 AM
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#2
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Thinks s/he gets paid by the post
Join Date: Mar 2012
Posts: 3,925
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Buying every week is likely a waste of your time and quarterly will likely be sufficient for what you're trying to accomplish.
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10-03-2022, 09:09 AM
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#3
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Thinks s/he gets paid by the post
Join Date: Oct 2015
Posts: 2,301
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Quote:
Originally Posted by njhowie
Buying every week is likely a waste of your time and quarterly will likely be sufficient for what you're trying to accomplish.
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Agree! In fact, for my own purposes, I'd probably go with 6 or even 12 month rungs.
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10-03-2022, 11:00 AM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2007
Location: Independence
Posts: 7,271
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Y'all are so regimented! I look for the best opportunity at the moment and just try and balance any hoped for superior future offered income product against what our cash is making now or could make if we pull the trigger on the deal du jour. I'd sorta like to have a ladder and know that every three months it was time to buy again, but it's not me.
We bought some 26 week T-bills on the 19th, then broke our GTE 3% CD and now have a large amount of cash making 3.25% at Marcus until February. See that an order for four times as much as we bought on the 19th just executed on 10/3 for $98.05 - so about 3.977%? In a few weeks maybe we'll buy some more, or maybe not - depends on the deals floating around at that time
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"Be kind whenever possible. It is always possible." Dalai Lama
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10-05-2022, 01:10 AM
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#5
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Thinks s/he gets paid by the post
Join Date: Mar 2007
Posts: 1,854
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For me even monthly is too often. I have ours set up with annual CDs but staggered purchases every 6 months, so we have to do something only twice a year. Some may need more liquidity/flexibility than that, but it works for us. We keep 1 year of spending in a MM account for any needs we may have.
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"Live every day as if it were your last, and one day you'll be right" - unknown
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10-05-2022, 05:05 AM
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#6
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Thinks s/he gets paid by the post
Join Date: Jan 2013
Location: SoCal, Lausanne
Posts: 4,408
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Depending on the size of your holdings and how much cash is coming in monthly, at some point it becomes a bi-weekly to monthly task. Last year my coupon payments and maturities would sit in a money market paying next to nothing waiting for higher yields. Now it has become a daily to weekly management affair with so many options to lock in higher yields. The sweet spot in yields is currently 1-3 years out.
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10-05-2022, 05:20 AM
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#7
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Thinks s/he gets paid by the post
Join Date: Nov 2014
Location: Austin
Posts: 1,369
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It really depends on what you're trying to accomplish. I have some money set aside for some home improvement projects after I retire in a few months. My high yield checking account is only "high yield" for the portion under $10K. So I have two 4 week T-bills, offset by 2 weeks, with auto roll set up. I went with 4 weeks because my actual retirement date isn't 100% known. So, for me, just a way to lose less to inflation while I'm waiting.
Cheers
Big-Papa
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10-05-2022, 08:03 AM
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#8
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Thinks s/he gets paid by the post
Join Date: Aug 2017
Location: Champaign
Posts: 4,677
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Depending on how much is in each rung of the ladder, we typically go from 12 months, 2 years, or 5 years. For planning, we can see the dates due, and decide to re-invest, cash out or buy another fund.
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"Do not go where the path may lead, go instead where there is no path and leave a trail."
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10-05-2022, 08:12 AM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2016
Location: Colorado
Posts: 8,971
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I built mine to match liabilities which is producing 100% of my income until I reach 70. So my rungs go out 10 years. I have bonds roll off every month or two and I buy at the long end. I have more than doubled my yield this year and our income is now about 130% of what we need. I also have sold some low yielders and flipped them into higher interest bonds. My taxable ladder yields just under 6% and my muni ladder in my taxable account yields in the mid 4’s. It a big game for me. I enjoy the hunt and have little fear of going long because for me it’s all about the income.
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10-05-2022, 09:44 AM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 17,134
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My first bond ladder from earlier this year now has its first 4%+ CD.
Beats the heck out of a much older 0.6% CD that matured a few months ago.
__________________
Comparison is the thief of joy
The worst decisions are usually made in times of anger and impatience.
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10-05-2022, 11:30 AM
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#11
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Administrator
Join Date: Apr 2006
Posts: 22,923
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Ideally, I'd like to have a ladder with 8 rungs - 2 year notes/CDs maturing every quarter, but I'm a long way from being there.
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Living an analog life in the Digital Age.
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10-05-2022, 04:12 PM
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#12
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Recycles dryer sheets
Join Date: May 2009
Location: Tampa
Posts: 209
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Quote:
Originally Posted by Chuckanut
My first bond ladder from earlier this year now has its first 4%+ CD.
Beats the heck out of a much older 0.6% CD that matured a few months ago.
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Yes it does, and congrats
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