The best way to manage a collection of individual bonds is to stagger their maturities and the timing of your interest payments. This setup, called a bond ladder, protects you against a flare-up of inflation and rising interest rates because you'll have regular infusions of cash to roll over into new bonds at higher rates. The same idea works for bank certificates of deposit.
Focus on U.S. Treasury notes and bonds, or high-quality municipal bonds. They're best for ladders because the supply is plentiful and the chances of default are practically nil. Alternate maturities among one, three, five and ten years.
Don't try this with bond funds. You have no control over the timing and maturity of bonds in a fund. Plus, a bond fund will give you a shot at capital gains in a bullish bond market -- when interest rates are falling -- but your fund shares will lose value when interest rates rise.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Rest easy. You won't lose principal as long as you hold each bond until it matures.
JUMP TO:
Finance
Credit
Retirement
Investing
-
Visa Is the Worst Dow Stock Wednesday. Here's WhyVisa stock is down sharply Wednesday after the credit card company came up short of revenue expectations for its fiscal Q3.
-
Another Analyst Moves to the Sidelines on Tesla Stock After EarningsTesla stock is spiraling Wednesday after the EV maker's big earnings miss and Wall Street has been quick to weigh in. Here's what you need to know.
-
Best Banks for High-Net-Worth Clientswealth management Kiplinger's 2023 list of the best banks for higher-net-worth clients.
-
Stock Market Holidays in 2024: NYSE, NASDAQ and Wall Street HolidaysMarkets When are the stock market holidays? Here, we look at which days the NYSE, Nasdaq and bond markets are off in 2024.
-
Stock Market Trading Hours: What Time Is the Stock Market Open Today?Markets When does the market open? It's true the stock market does have regular hours, but trading doesn't necessarily stop when the major exchanges close.
-
Bogleheads Stay the CourseBears and market volatility don’t scare these die-hard Vanguard investors.
-
The Current I-Bond Rate Until November Is Mildly Attractive. Here's Why.Investing for Income The current I-bond rate is active until November 2024 and presents an attractive value, if not as attractive as in the recent past.
-
What Are I-Bonds? Inflation Made Them Popular. What Now?savings bonds Inflation has made Series I savings bonds, known as I-bonds, enormously popular with risk-averse investors. So how do they work?
-
This New Sustainable ETF’s Pitch? Give Back Profits.investing Newday’s ETF partners with UNICEF and other groups.
-
As the Market Falls, New Retirees Need a Planretirement If you’re in the early stages of your retirement, you’re likely in a rough spot watching your portfolio shrink. We have some strategies to make the best of things.
