Sunday, August 27, 2023

Creating a Bond Ladder

Creating a Bond Ladder to generate Passive Income

I am creating a bond ladder.

The aim is to create a perpetual (as long as possible) revenue stream every month. 

Here's how it is going to work. 

I plan to buy 6 months time deposits or 6 months T-Bills, one at a time, once every month. 

At the end of 6 months, the first time-deposit/bond will mature, and I collect the interest. At the same time, I put the capital back into another 6 months time deposit/TBill. 

Conceptually it looks like this:

Bond ladder, time deposits, TBills

And it continues as long as the interest rates are above 3.5%.

I have already set up the first 3 tranches.

The first 2 tranches were set up using StashAway Simple Guaranteed, at the interest rate of 3.5% p.a.

Stashaway Simple Guaranteed, Time Deposits

The third tranche was set up using 6-month TBill, at the interest rate of 3.73% p.a.

So why did I use Stashaway Simple Guaranteed when TBills offer higher interest rates? No particular reason, but when I saw 3.5% in Stashway Simple Guaranteed, I thought it was good and I put money in - the process was easy and straightforward. Later I thought since TBills offer slightly higher interest rates, I should switch to TBills instead. 

So from now on, I will be able to earn $175-$184 every month, as long as interest rates stay above 3.5% p.a.

If you have spare cash, set up your own Bond Ladder today!

Any flaws with this method? Comment below. 


  1. Hi Finance Opti,

    Yes, it is good to create a T-bill ladder in the current elevated yield climate. The good thing about T-bills is that the interest is paid upfront.

    My wife and I have created a T-bill ladder too. In fact we are already into our 2nd cycle of T-bill investing, having recycled the funds from maturing T-bills into new ones. And we have used all manner of funds from cash, SRS to CPF OA.

    You can see my write up here.

  2. Thanks for your comment! Your interest income is truly inspiring!