Sometimes investors expect financial advisers to recommend complicated strategies that reflect the complex world we live in today. But often the best solutions are simple, old-fashioned ones. That’s especially true at a time when supposedly sophisticated approaches frequently fall flat and when low interest rates and high market volatility threaten our nest eggs.

Example of a simple but effective solution: A corporate manager in his early 60s came to me on the verge of retirement. He planned to rely on $3,000 a month from Social Security payments and a pension plus another $1,000 from investment income generated by his $300,000 IRA. To achieve that goal, his IRA would have to earn a 4% annual yield. But he didn’t want to bet on risky investments.

I recommended a strategy called a “bond ladder.”

How it works: In his $300,000 IRA, my client purchased a variety of high-quality corporate bonds that would mature at staggered intervals. They included three-year bonds rated AAA with yields of nearly 4% and four-, five-, six-, seven- and eight-year bonds with yields ranging as high as 6%.

When each bond matures, my client can roll over the proceeds into a new bond with an eight-year maturity, thereby continuing the ladder. That way, if interest rates spike up, he can reinvest money from the newly maturing bonds at higher rates, pushing up his overall returns. If interest rates decline, his overall returns won’t plunge, because he’ll still receive higher yields for at least several years.

Shrewd steps to keep in mind…

Bonds bought for ladders should typically mature in no more than 10 years because the additional yields from longer maturities usually don’t justify tying up your money for that many more years.

Avoid using US Treasury securities now. Yields are still close to historic lows.

Alternative: Consider a bank certificate of deposit or the highest-rated corporate bonds.

Don’t try to build a bond ladder with bond mutual funds. You have no control over when the bonds in those funds mature and when they are bought and sold, all of which affect your returns.

Instead, call the fixed-income desk at a discount brokerage firm, such as Fidelity Investments (800-544-9797, or Vanguard (800-992-8327, Tell a fixed-income expert that you want to build a bond ladder.

Make sure that you are paying a fair price for your bonds. Shopping for bonds is a bit tricky because you aren’t told how much commission or markup the bond broker is taking — it’s included in the price of the bond. You can check what others are paying for the same bond at a large, online bond supermarket, such as or

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