Creating A Bond Ladder

I spent the previous few weeks finishing a book bought during Christmas. Considering my workload, this is actually quite an “achievement” and I didn’t have to travel for work in Feb helped immensely. I am going to assume you know what a connection is. Year I have blog in regards to a few retail bonds that IPOed last. You can find out about them here.

I am not sure if you had heard of a bond ladder but essentially what this means is that you get a series of bond papers at regular intervals and hold them till maturity. Each relationship pays you interest twice a season (typically) and the main amount at maturity. Every month Assuming you repeat that process, you will create a portfolio that gives you a well balanced and predictable cash flows similar to that of a paycheck.

  • Friday mornings espresso from outside the office
  • Design, Build and Sell Scheme (DBSS) level from a developer
  • It do not need to be modified at all
  • You can pick to close the accounts at any time of his or her choosing

If you haven’t any use of those interest, you can reinvest them into bonds to take pleasure from the magic of compounding (similar to your CPF accounts). Unlike dividends, the eye and principal repayment can be an responsibility by the company to pay back. As such, cashflow is predictable as long as the issuer is solvent and able to repay and your capital is returned at maturity.

Why can’t the person in the street create a bond ladder? The key issue in Singapore is the administrative centre outlay as the bond market here’s not completely developed. 200,000 a certificate and are not offered to the person in the pub! The regulations are finally changing! You’ll be heartened to learn that regulations is changing here.

MAS is (after much lobbying from others) aiming to make it easier for corporates here to concern bonds to retail investors. You can browse the MAS appointment paper here. Setting distribution costs aside, it happens to be legally more onerous to concern corporate and business bonds to retail investors than to certified traders but this will probably change soon. Regulators must have incentives in place to encourage issuers to concern bonds to retail traders as if you and me.

2,000). With current technology, I don’t understand why the bite size can’t be even lower. With smaller bite sizes, it will also be easier to create a far more customized relationship ladder and allows you to mix and match issuers of different quality and rates of interest to diversify against over focus.