No standard formula; simulates bond portfolio
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A bond ladder is a portfolio of bonds with staggered maturity dates designed to provide regular income while reducing interest rate risk. This calculator helps estimate the returns from such a strategy.
The calculator simulates a bond portfolio with various maturities and coupon rates:
Key Components:
Details: Bond ladders provide regular income, reduce reinvestment risk, and help manage interest rate exposure by spreading maturities over time.
Tips: Enter comma-separated values for bonds, maturities, and rates. All values must be valid (positive numbers, matching counts for each input).
Q1: What's the ideal number of rungs in a bond ladder?
A: Typically 5-10 bonds with maturities spaced evenly over the investment horizon.
Q2: How does this account for interest rate changes?
A: The simulation assumes constant rates; actual results may vary with market conditions.
Q3: What types of bonds work best for ladders?
A: Treasury, municipal, or high-quality corporate bonds are commonly used.
Q4: Should I reinvest principal payments?
A: Typically yes, at the long end of the ladder to maintain the strategy.
Q5: What are the tax implications?
A: Varies by bond type - consult a tax advisor for your specific situation.