MW How to use bond/CD ladders as the ultimate hedge to keep your money safe

By Philip van Doorn

A careful selection of maturities for U.S. Treasury securities and bank CDs can protect you against interest rate risk while safeguarding your cash.

High interest rates make it easier to keep your money safe. But you can take measures to protect against rate risk as well.

There are many strategies for investment income, but you can never predict which way short-term or long-term interest rates may move. Some investors want safety more than anything else.

World events and economic forces closer to home can increase inflation, which leads to higher interest rates. Then again, higher rates can slow economic growth and lead the Federal Reserve to lower short-term rates. And you cannot assume that long-term interest rates will always be higher than short-term rates - during 2024, the reverse was often the case.

If you want to protect your money and take best advantage of current interest rates while lowering your risk of having to make subsequent investments at lower rates, or be ready to make investments at higher interest rates as time goes on, laddering a portfolio of bonds and bank certificates of deposits may work out well.

Ken Roberts, an investment adviser with Four Star Wealth in Reno, Nev., suggested doing this through U.S. Treasury securities and certificates of deposits at banks.

"You are sticking with high credit quality - the full faith and credit of the federal government for Treasury securities and FDIC insurance for the CD deposits," he said during an interview.

And it is easy to shop around for higher CD rates through your brokerage account or with the help of a financial adviser, while using the same platform to purchase Treasury securities.

Bank CDs are covered in the U.S. by the Federal Deposit Insurance Corp. up to certain limits (described here).

And if you are worried about exceeding FDIC deposit insurance limits, you can spread your deposits across various banks through your brokerage account or work with a bank that is part of a network that spreads very large deposits across enough banks to keep millions of dollars in cash covered by FDIC insurance.

If safety is your paramount concern, the reason you should hold your own bonds, rather than shares of a bond fund, is that you know how much you will receive when a bond matures. If interest rates rise after you buy a bond, its market value will go down, and vice versa. So if you buy a bond and are forced to sell it after rates rise, you will take a capital loss. But if you hold a bond until maturity you will be paid its face value.

A bond's face value is known as its "par" value. If you were to pay a 1% premium for a bond, for example, we would say you had paid 101. If your price were discounted by 1%, we would say you had paid 99.

There are typically premiums or discounts if you buy U.S. Treasury securities. You can see the pricing at The Wall Street Journal's U.S. Treasury Quotes page. The yield to maturity, as calculated by your broker, will incorporate any current premium or discount so that it reflects the capital gain or capital loss an investor buying at that moment can expect when a Treasury security matures.

To see why your ladder should protect you from interest rate risk, take a look at the yields, as of the close on April 9, for various maturities of U.S. Treasury securities. The yields on the table come from the U.S. Treasury's daily yield curve data, which is based on par prices. You can configure how the data is presented on that website if you want to see how the yield curve has shifted over time.

   U.S. Treasury Security  Symbol            April 9 yield 
   1 month                 BX:TMUBMUSD01M            3.66% 
   3 months                BX:TMUBMUSD03M            3.68% 
   6 months                BX:TMUBMUSD06M            3.71% 
   1 year                  BX:TMUBMUSD01Y            3.68% 
   2 years                 BX:TMUBMUSD02Y            3.78% 
   3 years                 BX:TMUBMUSD03Y            3.77% 
   5 years                 BX:TMUBMUSD05Y            3.91% 
   7 years                 BX:TMUBMUSD07Y            4.10% 
   10 years                BX:TMUBMUSD10Y            4.29% 
   20 years                BX:TMUBMUSD20Y            4.88% 
   30 years                BX:TMUBMUSD30Y            4.90% 
                                                   Source: 

You can click the Treasury securities' symbols in the table for more information, including intraday market yields.

Click here for Tomi Kilgore's detailed guide to the wealth of information available for free on the MarketWatch quote page.

As of April 9, 2026, we were looking at a sloped yield curve, with Treasury yields rising as maturities got longer. But only two years earlier, the yield on one-month Treasury bills was 5.48%, while10-year Treasury notes were yielding 4.36%.

It might have seemed strange that the yield curve was inverted. But it indicated professional investors expected a recession and were loading up on longer-term bonds, pushing up their prices and lowering their yields. The bond market anticipated that the Federal Reserve would reverse its policy of keeping short-term interest rates high to clamp down on inflation. In April 2026, the federal-funds rate, which usually drives short-term market rates was in a target range of 5.25% to 5.50%. Following three cuts late in 2024 and three more late in 2025, the federal-funds rate was in a range of 3.50% to 3.75%.

And that underlines the interest-rate risk facing investors when short-term rates were higher than long-term rates. A laddered CD portfolio would have protected against that risk, so that a saver's portfolio could adjust its yield upward, along with the market.

Maybe a "sweet spot" for your maturity is six months or a year. Or maybe locking in longer maturities is a good idea.

Right now (that is, on April 9), you can get these annual percentage yields (APY, reflecting compound interest) for CDs at various banks through one of the largest U.S. brokerage firms:

   CD Maturity   Annual percentage yield 
   3 months               3.91% 
   6 months               3.89% 
   1 year                 3.91% 
   2 years                4.00% 
   3 years                4.05% 
   5 years                4.15% 

Note that the CD yields tend to be higher than the Treasury yields for the same maturities. Income from U.S. Treasury securities is exempt from state and local income taxes, so this is another factor to consider.

Roberts suggested a five-bucket ladder for a good combination of U.S. Treasury securities and CDs for protection of capital and a hedge against interest-rate risk:

-- 20% in six-month U.S. Treasury securities at 3.71%.

-- 20% in a one-year CD at 3.95%.

-- 20% in a two-year CD at 4.00%.

-- 20% in a three-year CD at 4.05%.

-- 20% in a five-year CD at 4.15%.

"If interest rates rise, you will have the opportunity to reinvest at higher rates. If rates fall, you will have some higher rates locked-in," he said.

Roberts added that ladders can be adjusted over time. "You can structure a ladder to fit your needs," he said.

This article was originally published in April 2023 and has been updated with April 2026 yield-curve rates and annual percentage yields.

-Philip van Doorn

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

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April 13, 2026 11:29 ET (15:29 GMT)

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