How Bond Laddering Can Keep You From Having An SVB Portfolio Nightmare

Abstraction: Bond laddering strategy for principal protection and income

Key points:

• Forbes (Mitchell Martin, 2023-04-08): SVB sold a $21B securities portfolio at a $1.8B loss during a deposit run; shares fell 60% on March 9, closed by regulators the next day—illustrating that safe bonds sold before maturity can produce losses.
• Bond funds carry market risk: iShares Core U.S. Aggregate Bond ETF (AGG) fell 13% in 2022 as the Fed raised rates.
• A bond ladder = holding individual bonds maturing at regular intervals (e.g. 1-10 years); returned principal is reinvested, avoiding market losses and smoothing interest-rate changes (per James St. Aubin).
• Note an inverted yield curve: 6-month Treasurys yielded 4.9% vs 3.3% at 10 years; A-rated corporates (e.g. Southern California Edison, Morgan Stanley) yielded ~4.6-4.8%; 10-yr default rate for A-rated debt ~1.7%.
• Fidelity/Schwab/E*Trade offer laddering tools ($1 online trades); Fidelity recommends $200,000 minimum for diversity. Prebuilt alternatives: BlackRock iShares iBonds and Invesco BulletShares (~0.1% fees).
• Note: this is a personal-finance/investing article, not ML/AI content.

Connections: Silicon Valley Bank · Blackrock · Fidelity · Bond Laddering · Fixed Income Investing · Interest Rate Risk

Source: https://www.forbes.com/sites/mitchellmartin/2023/04/08/how-bond-laddering-can-keep-you-from-having-an-svb-portfolio-nightmare/