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Retirement & Planning
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Bond Ladders


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Call us at 888-213-4695 or visit your local branch.

With bond laddering, you invest in multiple bonds with different maturities—which is designed to give you the predictable income you expect from bonds and the flexibility to reinvest your principal.

How a ladder works.


Example of how a bond ladder works. How a bond ladder works: today Years to Maturity 0 2 4 6 8 10 Bond A 1% Yield Bond B 2% Yield Bond C 2.5% Yield Bond D 3% Yield

In the example above, you buy four bonds with staggered maturities. Your combined average annual yield is 2.125%.

2 Years From Today

Example of how a bond ladder works. How a bond ladder works: 2 years from today Years to Maturity 0 2 4 6 8 10 Bond A Matured 2% Yield Bond B 2.5% Yield Bond C 3% Yield Bond D New Bond 3% Yield

In two years, when Bond A matures, you reinvest the proceeds in a new bond, extending your ladder. You can continue to do this as bonds mature in the future.

This hypothetical example is for illustrative purposes only. It cannot predict or project the return of any specific investments.

While predictable, bond income is not guaranteed and is subject to call risk as well as possible default on principal and interest (which increases with lower rated securities).

How to build a ladder.

  • Buy bonds (such as Treasuries, munis, or corporates) or CDs with staggered maturity dates.
  • As each bond or CD matures, reinvest the principal in new bonds with the longest term you originally chose for your ladder.
  • If interest rates move higher, you can reinvest at higher rates. If rates fall, you'll still have some bonds locked in for the longer term at higher yields.
  • Be sure to consider the risks of investing; see more about .

Need a retirement income plan?

A Schwab Financial Consultant can help. Learn more about our modern approach to wealth management.

Ready to get started with Schwab?

Call 888-213-4695.

Already a Schwab client?

Call our team of Bond Specialists at 877-566-8812 for answers about bond laddering.

Attend free bond-related workshops at Schwab branches nationwide.