E*Trade Adds Easy Bond Laddering Tool

E*Trade added a few tools to its bond resource center, the most useful of which seems to be its bond laddering tool. It makes it easy to ladder bonds by just clicking three drop-down boxes, “Start in,” “end in,” and “mature every.” What’s laddering you ask?

When you ladder an investment, like bonds or CDs, you purchase several units of the financial product, each with consecutive maturity days. So you might get 3 bonds, one which matures in 1 year, one in 2 years, and one in 3 years. This way you’re guaranteed a reliable source of income. Or you could reinvest each one at 3 years as it comes due, so that you know you’ll have access to cash on certain dates but still be growing your nest egg.

Personally I don’t like E*Trade because it feels like the site is designed to look like a video game and thus encourage you to make more transactions than you might otherwise, but to each his own.

E*Trade

RELATED: Ladder Your CDs For Fun And Profit

Comments

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  1. Thenameismaia says:

    This is actually a pretty cool idea, methinks.

    Now if only I had a job so I could invest some monies in my nest egg…

  2. johnfrombrooklyn says:

    I find their baby commercials really stupid but somehow always end up laughing at them.

  3. diesel54 says:

    E*Trade screwed me over with inactivity fees. I didn’t realize that they’d penalize me for not being a day trader. Scottrade is a little more bare bones but has been much better to me.

    • tinyhands says:

      @diesel54: Maintain a combined balance of over (don’t quote me) $50,000 to avoid inactivity and account fees. I don’t day trade either. I currently only have $9 in my brokerage account with them, but more than $50k across my checking account and IRAs, so no fees on any of the accounts. I love having all of these accounts in one place, all linked to one dashboard. When I want to buy something in the non-retirement brokerage account, I can instantly move money. When I sell, I move it back, aggregating cash into the highest %-rate earning account.

      This is E*Trade after all though. My emergency fund is with another firm.

  4. ninja-meh says:

    E*Trade also screwed over my gf with the supposed 100 free trades and their fees are way too high compared to Scottrade’s (when it’s not free anymore).

  5. Javert says:

    “Personally I don’t like E*Trade because it feels like the site is designed to look like a video game but to each his own.”

    This is officially the stupidest reason for not using a web site…ever.

    • Ben Popken says:

      @Javert: Making it look like a video game encourages people to treat investing like a video game, which it’s not. I prefer a site like Vanguard that me want to go take a nap after I make my transaction, not play around with all the buttons and make more transaction than I might otherwise.

      • H3ion says:

        @Ben Popken: But they make their money primarily from transaction fees because they don’t do any underwriting per se. Why would you expect a dry economist approach when the entire purpose of getting you online is to generate income for themselves?

        • Ben Popken says:

          @H3ion: I don’t begrudge them the right to design their system as they have. I myself personally just would rather go to Vanguard or Scottrade.

  6. rjhancock says:

    It’s all fine and dandy except, you are better off investing in proper money market funds that invest in cd’s, bonds, and t-bills. You still get the interest from those investments AND you get near instant access to your money without penalties.

  7. Mr.Duke says:

    Normally, I would say having fixed income in your portfolio is okay. But not now. Except for riskier junk bonds, rates are super low. The Fed is printing paper money like madmen, flooding with world with dollars. When rates rise, bonds get kicked in the butt big time. Rates can’t go much lower. Higher rates are in the future. At some point, investors are going to want higher rates to buy Govt. bonds. With our national debt out of control, credit risk becomes an issue. Finally, inflation is bad for bonds, too. …

  8. smartmuffin says:

    @savvy9999: Not to defend inactivity fees, but let’s clarify a bit here.

    You don’t have to be a “day trader.” You can avoid the inactivity fee by making ONE trade per quarter. That’s really not so bad.

    Granted, many of their competitors have no inactivity fee at all, so yeah…

  9. rjhancock says:

    True, but the purpose of those vehicles was never to make money, it was a place to put money that earned more than the bank and might keep up with inflation.