The term "bond ladder" refers to a strategy that bonds investors use to diversify their portfolios. Investors do this by breaking their bond holdings into different kinds of bonds, and then hold the bonds with the longest maturity date until it reaches its maturity date.

An investment strategy known as a bond ladder involves spreading bond investments over time with continuous reinvestment.

It looks simple; it is even easier to do, and it brings great benefits.

Let's say you had a million dollars in your pocket, and when you found it, you decided to invest it. You can either inject lam in a one-time bond with a given maturity and wait by the sea for the weather, or be a little puzzled by the use of the ladder.

When you ladder your million, you divide it into several parts, for example, by 5. Then invest each part in bonds with different maturities: the first kopeck piece in bonds with one-year maturities, the second in bonds with two-year maturities, the third in bonds with three-year maturities, and so on. This results in a scheme where you receive coupons every year, plus the maturity of bonds by a given date. It's convenient, but not enough for our Napoleonic plans.

A bond ladder is an investment strategy that involves buying bonds with staggered maturity dates instead of putting all funds into one bond. For example, an investor might purchase bonds that mature in one year, three years, five years, and so on. As each bond matures, the principal can be reinvested into a new long-term bond, maintaining the ladder. This approach spreads out interest rate risk because not all bonds mature at the same time. It also creates a steady stream of income, since bonds mature at regular intervals. A bond ladder is often used by investors who want stability, predictable cash flow, and a way to manage risk without locking all their money into one maturity date.