Bond Ladders in a Rising Rate Environment

Posted by Chad R. O'Connell AIF QPFC | Mar 23, 2017 3:57:36 PM

Conceptual image with ladder reaching increasing graph.jpegWith a glut of information from the financial media, many investors have heard the drumbeat of rising interest rates. Market pundits are predicting higher rates due to rising inflation expectations coupled with an economy that is slowly picking up steam. The Federal Reserve has given more credence to the pundits by increasing the Federal Funds Target Rate twice in its past three meetings, causing investors to ask, “Will my bond ladder protect me in a rising rate environment?”

 

Before we get into the math, let’s revisit bond ladders and explain why we recommend using them. A bond ladder is a portfolio of individual bonds that have different maturities. For example, a ladder could be constructed with equal numbers of bonds with maturities across 1–10 years, or it could consist of bonds that mature in 2–7 years.

A bond ladder is a highly effective tool to help minimize risk. At least three types of risk are related to fixed income investing. (Click to read entire post...)

 

For more information, please contact Chad O'Connell at 716-634-8800 or [email protected].

 

 

Topics: interest rates, bond ladder

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Chad R. O'Connell AIF QPFC

Chad manages the firm’s retirement plan services group, which focuses on investment management, consulting and fiduciary governance services to corporations and not-for-profit entities. In addition, Chad also provides financial services to high net worth individuals and business owners.

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