Laddering

Definition: Purchasing bonds that mature at various intervals.  This provides the investor with greater regularity of income.

TeenAnalyst Advice: Bond laddering works by purchasing bonds with different maturities.  For example, you might purchase 3 year, 5 year, and 10 year bonds.  By doing this, you are giving yourself greater liquidity because your bonds will be maturing periodically.  If you simply bought three 10-year bonds, you would have to wait 10 years to see any of your money returned to you.

Bond laddering is a good idea for anybody who needs liquidity and a greater certainty of receiving their money at periodic intervals.