Ladder Portfolio
Method of investing that staggers the maturities of a group of bonds. As a bond matures, the investor can reinvest the proceeds in either short- or long-term bonds depending on the interest rate and economic environment at that time. For example, if interest rates are rising, the matured bond's proceeds can be invested in longer term, higher yielding bonds. As interest rates decline, higher interest rates would have already been locked in through the previous purchase of higher yielding bonds. As bonds continue to mature in a falling interest rate environment, the proceeds can be invested in bonds of shorter maturities, thereby having liquidity for future investment in longer maturity bonds if interest rates increase.
Popular Insurance Terms
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Measure of policyholder interest in a variable annuity policy prior to the annuity date. This measure is similar to a unit in a mutual fund. ...
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Payment of premiums and benefits as they come due. In pension plans, known as the "pay as you go basis." The plan depends on new employees coming into the work force so that their ...
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