How to use laddering to make the most of your fixed income investments

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08 Jul 2023, 02:01 PM IST

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What is laddering? It is a technique of buying multiple fixed-income products, each with a different maturity.

Text: Centre for Investment Education and Learning (CIEL).

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How to use laddering to get a better return When a product matures, monies can be reinvested in a new product with the highest yield in the available time horizon.

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Keep this in mind In a rising interest rate scenario, the maturing principal can be reinvested at higher rates.

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Benefits of laddering By staggering maturity dates, investors avoid getting locked into a single interest rate.

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Take a note The laddering reduces risk and provides a predictable cash flow with adequate liquidity.

(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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How to use laddering to make the most of your fixed income investments

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