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Bond ladders

Do you want to have a steady income stream and protect yourself from inflation risk?

 

Bond ladders can offer a predictable flow of income at a predetermined rate of return. A bond ladder is a portfolio invested equally in bonds maturing periodically, usually every year or every other year. As bonds mature, the money is reinvested on the long-end to maintain the maturity structure.

 

Bond ladders offer lower reinvestment risk, diversification, structured cash flows and ongoing liquidity. For more information on these benefits, read What is a bond ladder?

 

At Merrill Lynch, your financial advisor and a team of Fixed Income Product Specialists can:

 

  • Provide investment ideas through their daily "Quick Picks" bond portfolios
  • Stress test individual bond holdings for performance in changing interest rate environments
  • Periodically review portfolio holdings to help ensure your allocations are aligned with your investment goals

3 Questions to Ask Your Advisor

  1. How can a bond ladder potentially help me create the income I need?
  2. How can a bond ladder help me diversify my fixed income holdings across maturities and credit quality levels?
  3. How can a bond ladder complement my other equity and fixed income investments?

Bond ladders are subject to market risk and are not guaranteed. They do not offer downside protection. A prolonged decline in the bond market can result in a decline in price. Investing in fixed-income securities may involve certain risks, including the credit quality of individual issuers, possible prepayments, market or economic developments and yields and share price fluctuations due to changes in interest rates. When interest rates go up, bond prices typically drop, and vice versa.

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