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Laddering
Term category: Bonds, Strategies
In 10 words or less: A strategy that involves buying bonds with different maturities.

Definition: Purchasing bonds that mature at various intervals. This provides the investor with greater regularity of income and diversifies some risks away.

StockJargon Advice: Bond laddering works by purchasing bonds with different maturities. For example, you might purchase 3 year, 5 year, and 10 year bonds. By doing this, you are giving yourself greater liquidity because your bonds will be maturing periodically. If you simply bought three 10-year bonds, you would have to wait 10 years to see any of your money returned to you.

Bond laddering is a good idea for anybody who needs liquidity and a greater certainty of receiving their money at periodic intervals.

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