Author Topic: Buying CD or treasury ladder vs BND?  (Read 904 times)

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  • Stubble
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  • Location: Bay Area
Buying CD or treasury ladder vs BND?
« on: February 13, 2023, 11:57:17 AM »
Hi, Iím retired a year or so with about 52% low cost index stock funds and 48% cash/cdís/bonds to mitigate SORR with a rising equity glide path. My cash/cd/bond allocation was over 1/2 cash till last May when interest rates started rising and I started buying short term cdís. Now looking at creating a longer term cd or US treasury ladder, but wondering whether I shouldnít just be buying BND or similar, now that interest rates might not be rising much more?

2nd question: most of this cd/bond allocation has been in taxable rather than retirement accounts, but for various reasons (partly because it hadnít been earning much) I havenít needed to pay much in the way of federal income taxes so it didnít matter, except for some state tax. After this year however that will be less true, and Iím wondering if I should switch more of the cdís to retirement accounts and more of the VTSAX, etc. to taxable, to maximize the zero LTCG rate. Eventually though, Iím ďspendingĒ out of the cd/bond side to slowly up the stock allocation, so it means more shifting around of the pieces. Thoughts? Thanks!


  • 5 O'Clock Shadow
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Re: Buying CD or treasury ladder vs BND?
« Reply #1 on: February 14, 2023, 01:33:34 PM »
I'm planning to retire in May and am doing what I'm calling a bond runway, basically planning for the first 2 years of spending to come from a treasury ladder exclusively. The rest of my funds will be 85% total stock, 15% total bond index funds that I won't touch for the first 2 years, so I think you would call it a rising equity glide path.

Just last week I bought T-bills that mature every 3 months, that will dump into a money market at Vanguard and then to my bank account as needed. Rates are 4.6-4.8% so it seems like a solid sequence hedge with not too much opportunity cost. I didn't want the interest rate risk on those first two years so I went with actual bonds vs a fund, but long term I plan to only have stock and bond index funds for simplicity, ease of rebalancing, etc.

I'm holding them in taxable, but they'll only earn about $3k total in those 2 years so I don't feel like the tax hit is going to be significant.


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