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Recent Bond Article in SD Union Tribute

By Terry Savage on November 10, 2017 | Investments

Loved your article on the risks involved and reasons “bonds” are not always safe. My CFP has 30% of my portfolio in a 10 year corporate bond ladder (no junk bonds) that yields on average 3.5 %. His plan is to hold each one to maturity and then replace them with another bond 10 years out. Isn’t this a safer approach than the ones you mentioned in your excellent article? If not, what am I missing?

Terry Says

Bond "laddering" is an excellent way to structure a portfolio of bonds -- so you're never "stuck" with low-yielding bonds for very long!  The older ones are  always replaced with new higher-yielding bonds as rates rise.  (And, of course, it works in reverse if rates are falling.)  As long as you understand that if you were forced for some reason to sell all of these bonds at one time you would take a loss, this is a good way to structure a long-term portfolio of bonds.



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