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Laddering Bonds

Another way to create a steady income flow is to buy a series of bonds that have scheduled maturities and stagger them so that you have a bond maturing each year over a period of time. Typically, people do this with zero coupon bonds, purchasing 10 years of bonds with varying maturities. This eliminates the interest rate risk associated with bonds, which is discussed later in the book, and provides steady and predictable income. Laddering can be an effective means of generating predictable income. It does not, however, provide you with inflation protection, so you'll need to limit this strategy to part of your retirement income solution if you like the concept.


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