Given that the market is at all time high and the economy seems to be as cheerful as the market is, it makes sense to take some profits off the table. But, the problem is the interest rates are also at rock bottom. we may face adverse situation when the interest rates catches up and might have to face capital losses if we are into wrong products.
i have come across a nice strategy to work around this. it is building a bond ladder.
does any one have experience of building ? did any one try it in the Indian scenario ?
Its a good concept but in India we have limited bonds to play with…our bond market access to retail is limited with low liquidity…you may still try with tax free/PSU bonds but at very low yields i don’t think it makes sense as of now.
Laddering is a nice concept where you want returns periodically. I know people who have done this on a Fixed Deposit as this is easier to monitor. This person has built a laddering system where his FD matures every quarter. He has built a laddering system for 5 years. He takes the interest and rolls over the fD for the next 5 years. This way, his cashflow is steady.
Not sure how this will work for bonds as you should know the maturity of the bond. Apart from this, you should have that many bonds to book every quarter. Also if you close the bond then the laddering system will break
Good Idea,
You can combine liquid fund & constant maturity gilt fund.
If you want you can add medium duration funds as well (Bharat Bond ETF may be).
This should be good proxy I feel.
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in my view, these medium/longer term debt funds are not advisable at current yield cycle