Laddering vs. not, and other questions

Discussion of the Bond portion of the Permanent Portfolio

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Sir_Bondalot
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Laddering vs. not, and other questions

Postby Sir_Bondalot » Mon Sep 25, 2017 9:49 pm

I've made the decision, as a new member here and recent 'convert' ;) to move my traditional 70/30 portfolio into a golden butterfly. Young investor, so talking small-ish amounts of cash here.


As per my understanding from reading here, I bought the longest maturity treasury bond I could find on the secondary market through a Roth IRA.

1. I made the mistake of not laddering it with those of shorter maturities Just bought one fat 30 yr bond at tiny discount for my LT bond portion. 2.75% coupon. Probably won't have enough to buy any more bonds for another few months. Is this an issue?
What is the broader consensus on laddering long term bonds when buying via secondary market? If we are holding our bonds until time to rebalance due to drops in other categories or bond price spikes, does it matter if it is laddered or not?

2. How exactly do these pay the coupon? I can't figure it out. Is it deposited into my settlement fund, or somehow reflected in the bond price? I can wait and find out but I'm impatient.
Last edited by Sir_Bondalot on Tue Sep 26, 2017 7:42 am, edited 1 time in total.
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Kriegsspiel
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Re: Laddering vs. not, and other questions

Postby Kriegsspiel » Tue Sep 26, 2017 7:25 am

1. Nah. It'll make it easier to track. Just keep buying the longest bonds whenever you but LTTs and you wind up with something like a ladder.

2. At Vanguard, it deposits it into your settlement fund.
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jhogue
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Re: Laddering vs. not, and other questions

Postby jhogue » Tue Sep 26, 2017 12:46 pm

I agree on both counts:

A bond ladder will emerge over time by either rebalancing or adding to your LTTs over time (or both). Always buy the longest term LTT on the secondary market and you will be fine.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Sir_Bondalot
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Re: Laddering vs. not, and other questions

Postby Sir_Bondalot » Tue Sep 26, 2017 8:50 pm

Thanks for the reassurance. That's what I thought. I'll stay the course.

Also for some reason, I thought I would get 1 CUSIP per $1000. Because it was all the same issue date, it was for one CUSIP. Not that it matters.


Also sorry for the spelling mistake in my original post. I have corrected them. I probably looked like an idiot. Too much whiskey last night :)

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