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Bond Ladder Calculator
Plan a ladder of Treasuries, corporate or municipal bonds. Enter the amount, the number of rungs, how far apart they mature and the yield at each maturity, and get the average yield, the income you receive each year, a maturity schedule and an optional rolling ladder.
Last updated:
Ladder
$
1 to 30, split equally
Yields (bought at par: coupon = yield)
Enter yields as
%
%
Rungs in between are interpolated in a straight line
Separate with commas or new lines. If you list fewer, the last one is repeated.
%
Treasury interest is exempt from state and local income tax
Rolling the ladder
%
years
1 to 60 years
Enter your values to see the result.
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How to use the Bond Ladder Calculator
- Enter the total you want to invest and how many rungs to split it into.
- Choose the spacing, for example a bond maturing every year for a 5-year ladder.
- Enter the yields as a shortest and longest yield, or type one yield for each rung.
- Decide whether to roll maturing bonds into new longest-term bonds, and set the yield you expect.
- Press Calculate ladder and review the maturity schedule and yearly cash flows.
How the ladder is calculated
- Amount per rung = total ÷ number of rungs.
- Rung yields: with the curve option, rung i of n gets shortest + (longest − shortest) × (i − 1) ÷ (n − 1).
- Annual interest of a rung = amount × yield; it is paid every year until the rung matures, split into 2, 1 or 12 payments.
- Average yield = sum of rung yields ÷ number of rungs (equal amounts).
- Average maturity = sum of rung terms ÷ number of rungs, a quick measure of how long your money is tied up.
- Rolling: a maturing rung is reinvested for the ladder's full length, so its principal stays invested and only interest is paid out.
Common ladder designs
| Goal | Typical design | Why |
|---|---|---|
| Cash reserve with better yield | 4 to 6 T-bills or notes maturing every 3 to 12 months | Money comes back often; little rate risk |
| Steady medium-term income | 5 rungs, one maturing each year | Blends short and 5-year yields; easy to roll |
| Retirement spending plan | 10 to 30 rungs, one maturing each year you need cash | Each maturity funds a year of spending |
| Known future expenses | Rungs timed to tuition bills, a house down payment, etc. | Principal arrives when the bill is due |
Tips for building a bond ladder
- Hold to maturity: a ladder's main protection against rising rates is that you never have to sell a bond at a loss.
- Check credit quality: Treasuries carry no default risk; for corporate or municipal bonds, spread rungs across issuers.
- Compare after-tax yields: Treasury interest is free of state income tax, which matters in high-tax states.
- Watch call features: callable bonds can be repaid early, which breaks the ladder's schedule.
- Inflation protection: a ladder of TIPS works the same way but its principal rises with inflation.
Frequently asked questions
What is a bond ladder?
A bond ladder splits money across bonds that mature at regular intervals, for example one bond maturing each year for five years. Each time a bond matures you get principal back to spend or reinvest, and the ladder as a whole earns a blend of short and long-term yields.
Why build a ladder instead of buying one bond?
A ladder reduces reinvestment risk and interest-rate risk: only part of the money comes due at any one time, so you are never forced to reinvest everything at a low rate, and you have regular access to cash without selling bonds before maturity.
How is the average yield of a ladder calculated?
With equal amounts in every rung, the dollar-weighted average yield is the simple average of the rung yields. For example, rungs yielding 4.0%, 4.1%, 4.2%, 4.3% and 4.4% average 4.2%, so $100,000 earns about $4,200 in the first year.
What happens when I roll a ladder?
When the shortest bond matures, you buy a new bond at the long end of the ladder. A 5-year ladder with yearly rungs then always holds bonds maturing in 1 to 5 years, and after five years every rung was bought at the 5-year yield of its time.
Are Treasury ladders taxed?
Interest on Treasury bills, notes and bonds is subject to federal income tax but exempt from state and local income tax. Corporate bond interest is fully taxable, while municipal bond interest is often exempt from federal tax. Enter your rate in the tax field to see after-tax income.
Does the calculator handle bonds bought at a discount or premium?
It assumes each bond is bought at par, so its coupon rate equals its yield. A bond bought below par pays less coupon income and returns more at maturity; the total return is similar, but the timing of cash flows differs.
Are all the tools on FreeToolCabin tested for quality and accuracy?
Yes! Every tool on our site undergoes automated Q/A testing in real browser environments to ensure high precision, correct output, and zero errors. If you happen to spot a bug or have a suggestion, please contact us at [email protected] and our team will review it right away.
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