A.I.M. Users Bulletin Board

[ls7550]

RE CASH and Bond Ladders

The best settings for 2000 to 2003 and from 2006 to 2009 was 100% cash and from 2003 to 2006 and so far 2009 100% stock

Hi TF

Some history and info to ponder



Bond Ladders

http://www.financialwebring.org/gummystuff/bonds-4.htm

* Today is January 1 and we buy three bonds.
* The first matures 1 year from today, the second in 2 years, the third in 3 years.
* The maturity dates are the rungs of the ladder.
* At the first maturity date (one year from now) a bond matures and we immediately buy a 3-year bond
(recognizing that the yield may change for this new bond).
* At the next maturity date we buy another 3-year bond.
* etc. etc.
* On January 1 of each year we always have three bonds maturing in 1, 2 and 3 years (with, usually, different yields).
....
except for initial transients, the gains are associated with the longest term bonds ... because of the G3 factors which keep piling up, in Table 1. Hence, although we always have bonds maturing in 1, 2 and 3 years, our gains are more and more associated with the longest term bonds.