Treasury ladders
A Treasury ladder is a strategy that involves purchasing Treasury securities with staggered maturity dates. Instead of purchasing a single Treasury with a fixed maturity date, you'll spread your investment across multiple Treasuries with varying maturity dates. This strategy helps to manage interest rate risk and provides a consistent income stream as Treasuries mature. T-Bills are generally issued with maturity periods of 4, 8, 13, 26, and 52 weeks.
For example, if I wanted to build a T-Bill ladder that consistently matured every 13 weeks, I would:
1. Purchase 2 13-week T-Bills, a 26-week T-Bill, and a 52-week T-Bill
2. In 13 weeks, use the proceeds from the 2 13-week T-Bills to purchase a 26-week T-Bill and 52-week T-Bill
3. Set everything to auto-invest into a 52-week T-Bill when the Treasury matures
This should set you up with a T-Bill ladder that matures every 13 weeks.
| T-Bill | Weeks to maturity (now) | In 13 weeks | In 26 weeks | In 39 weeks | In 52 weeks |
| 13-week | 13 | 0 (reinvest into 52) | 39 | 26 | 13 |
| 13-week | 13 | 0 (reinvest into 26) | 13 | 0 (reinvest into 52) | 39 |
| 26-week | 26 | 13 | 0 (reinvest into 52) | 39 | 26 |
| 52-week | 52 | 39 | 26 | 13 | 0 (reinvest into 52) |
Yes, this is more complicated though still easy to implement and potentially worth generating slightly more yield (about 0.25% more worth).
Is the juice worth the squeeze? Maybe not - I personally find Treasury MMFs far simpler.
You can purchase Treasuries directly at each of the major brokerages, and below are the instructions for Schwab, Fidelity, and Vanguard: