Meaning of 1-3 yr and 10-30 yr treasury ladders

Discussion of the Bond portion of the Permanent Portfolio

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LittleDinghy
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Re: Meaning of 1-3 yr and 10-30 yr treasury ladders

Post by LittleDinghy » Sat Jun 08, 2019 10:48 pm

Thank you everyone for your replies. I feel more confident now with the wisdom you all have shared with me. Now, it is on to worrying about how to proceed with the gold purchase, so I"m heading over to read that forum.
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vnatale
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Re: Meaning of 1-3 yr and 10-30 yr treasury ladders

Post by vnatale » Mon Dec 09, 2019 9:19 pm

sophie wrote:
Sat Jun 08, 2019 9:46 am

Don't reinvest the TLT dividends. Let them pile up as cash, along with the bond interest payments.
Reading this just answered a question I'd earlier asked tonight. EFTs DO pay dividends! I have never owned one and assumed that that they did not.

After I read the above did a search and found this...

"Exchange-traded funds (ETFs) pay out the full dividend that comes with the stocks held within the funds. To do this, most ETFs pay out dividends quarterly by holding all of the dividends paid by underlying stocks during the quarter and pays them to shareholders on a pro-rata basis. Jun 22 2019"

That means I CANNOT use the daily prices of TLT to determine the full return between certain dates.

Vinny
"I only regret that I have but one lap to give to my cats."
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vnatale
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Re: Meaning of 1-3 yr and 10-30 yr treasury ladders

Post by vnatale » Thu Apr 23, 2020 6:12 pm

Pet Hog wrote:
Thu Jun 06, 2019 7:10 pm
LittleDinghy wrote:
Thu Jun 06, 2019 9:16 am
Is it really better to use this whole 25% to buy one issue of treasuries (whether all 30 year at auction, or one issue somewhere between 25 and 30 years per the PP book), or is it better to buy a ladder of treasuries with the rungs of the ladder being 25, 26, 27, 28, 29, and 30 years to maturity?
One strategy you might like to consider is somewhere between the two.

I have a "ladder" of two long-term treasuries (a step-ladder, if you will!) of approximately equal value, with one paying coupons in February/August and the other in May/November. This way I get an interest payment every quarter, each one about the same amount. And I'm not getting too much cash at once, and I have four days a year (rather than two) to consider a reinvestment/rebalance strategy. Next time I sell, I will make sure they are staggered about three years apart. That means it renews as a 30/27-year-maturity ladder, and when it becomes a 27/24-year ladder it's time to sell again. So you sell one every three years and buy a 30-year treasury at auction, holding each for six years. Keeping the maturities in the 30-to-24-year range ensures high volatility and long duration, better matching the volatility of the stock and gold tranches -- a feature I think should help in these days of low interest rates.

And not too complicated to implement as part of a 35/15 rebalancing strategy.

Are you still doing the same as described above?

VInny
"I only regret that I have but one lap to give to my cats."
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