How to Build a Bond Ladder Using ETFs

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Bond investing is one reason investors seek the help of a financial professional. Learn how SmartAsset can help you find clients looking for advice.

Bonds can offer a relatively safe way to invest and earn consistent interest income over time. A bond ladder exchange-traded fund (ETF) offers exposure to multiple bonds with varying maturity dates. Investing in a bond ladder ETF can help with diversification and it can be easier than building a bond ladder yourself. Knowing how bond ladder ETFs work can help you decide if they’re right for you. It also may be a good idea to speak with a financial advisor if you’re thinking about incorporating bond ladders into your overall investment strategy.

How a bond ladder strategy works

A bond is a form of debt. When you invest in a bond, you’re allowing the bond issuer the user of your capital for a set time period. Once the bond matures, the bond issuer returns your capital to you. During the maturity period or term, the issuer can make interest payments to you for the use of your money, typically on a semiannual basis.