I have been reading on and off about bond ladders and every guide I find starts off with something like "Suppose you had $50,000 to invest in bonds". It seems rather unrealistic how that would be the case. It also assumes no ongoing cashflow. Is this all done for the sake of making the numbers easy to understand in the guide? Or is there a valid reason to make a bond ladder a "one and done" event?
Could I make a bond ladder as follows? Start by buying a 5 year treasury. Wait a year and then buy another 5 year treasurey. Wait a year again and by a third 5 year treasury. Wait and buy a fourth. Then a fifth. In year six the first bond matures so reinvest it but now buying two five year treasuries. Next year reinvest one and buy one. Next year reinvest one and buy one. Again. Again. In the 11th year, reinvest 2 and buy 1 new. Next year reinvest 2 and buy 1. Again. Again Again. In other words, each year reinvest whatever number of bonds are maturing and add one.
What am I not understanding?
Submitted October 31, 2021 at 07:20AM by jackelfrink https://ift.tt/3nNCM15
