Fifteen years ago when, when someone asked me if they should invest in a bond fund or create a bond ladder, I always told them that a ladder was preferable, assuming you had enough money to properly build one.
After seeing what happens to ladders in real life over time, my thinking has evolved. In many circumstances I believe a well chosen bond fund or better yet, a mix of Bond Exchange Traded Funds (ETFs) would be a preferable choice.
This is not say that bond ladders are “bad,” just that it is “okay” to use a bond fund/ETF.
Generally investors like the ladder, because it provides “certainty” in income and the return of principal at maturity. An investor can walk out his or her broker’s office with a nice presentation and chart that tells them exactly what income this ladder will provide in various years, and when the individual…
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