Budman
Recycles dryer sheets
- Joined
- Feb 19, 2007
- Messages
- 120
I am currently giving heavy consideration to rolling out of my company's 401K into a rollover IRA with Fidelity and establishing a bond ladder with the cash portion of my portfolio. Inside the 401K, my company offers a cash with interest option which is currently paying 4.3%, consisting of hundreds of AAA treasury and insurance contracts. It is quite safe.
I believe I can better that 4.3% with the ladder. Fidelity's bond offerings are paying 5 - 6% + for AA and above rated corporate bonds. A 1% increase in earnings is large over a 30 year retirement and I do not want to cut myself short. I am concerned about the additional risk involved, but everything I read is that the high credit quality bonds have a very low default rate.
To eliminate interest rate risk, I intend to purchase discounted bonds. To reduce credit risk, I will invest in only AA or higher bonds, have mulitple issuers, and I do not want to go out farther than 5 years and will have staggered maturity dates by year. Does anyone have any experience with a bond ladder?
I believe I can better that 4.3% with the ladder. Fidelity's bond offerings are paying 5 - 6% + for AA and above rated corporate bonds. A 1% increase in earnings is large over a 30 year retirement and I do not want to cut myself short. I am concerned about the additional risk involved, but everything I read is that the high credit quality bonds have a very low default rate.
To eliminate interest rate risk, I intend to purchase discounted bonds. To reduce credit risk, I will invest in only AA or higher bonds, have mulitple issuers, and I do not want to go out farther than 5 years and will have staggered maturity dates by year. Does anyone have any experience with a bond ladder?