Masters in Business At The Money: Building A Bond Ladder
6 snips
Oct 23, 2024 
Karen Veraa, Head of iShares US Fixed Income Strategy at BlackRock, shares insights on navigating the unpredictable bond market. She discusses the benefits of building a bond ladder, which helps secure income and mitigate interest rate risks. The conversation highlights how to use ETFs for diversification and professional management in bond investing. Veraa also explores aligning bond ladders with retirement plans and offers strategies for constructing them using various asset classes to optimize returns.
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Bond Ladder Basics
- Build a bond ladder by spreading investments across different maturity dates.
- This provides predictable income and flexibility regardless of interest rate changes.
Bond Ladder Allocation
- Most bond ladders allocate equal amounts to each maturity rung for simplicity.
- However, some tailor allocations to match required minimum distributions (RMDs) from retirement accounts.
Bond Ladder Investments
- Utilize diverse bond types in your ladder, including munis, corporate bonds, and TIPS.
- Avoid CDs due to term limitations and potential penalties for early withdrawals.