I guess the before and after tax would depend on where you were keeping your ladder (taxable or tax deferred). While I understand the parts of the UK tax system that apply to me, I am less familiar with that of the US - can you explain what the tax difference is between holding individual bonds and a bond fund (or point me to the relevant info)?Comparing a ladder to a fund should use the same maturities. In your "case" it would be a 1-5 ladder to a 1-5 fund.As some stage, I might redo the calculations to compare a 1 to 5 year ladder and fund, but I suspect the conclusions would be the same. A comparison of a 0 to 5 year ladder and a 1 to 5 year fund would also be interesting.
Way back when the yield curve was more "normal" a 3-7 ladder and a a 3-10 fund had very similar average maturities. At that time the ladder won. Even before tax but even better after tax.
The current yield curve is inverted. And because of that and also because of the current Fed changing of the discount rate very 4 to 8 weeks my current ladder is 0-52 WEEKs.
I also make adjustments to fixed income maturity - although, it would appear, somewhat milder than yours! It allows me to engage in a certain amount of portfolio tinkering (which scratches an itch) that is unlikely to have a devastating outcome.
cheers
StillGoing
Statistics: Posted by StillGoing — Thu Sep 12, 2024 2:19 am — Replies 98 — Views 12745