There are a lot of very smart people working at hedge funds and institutions who have already priced in interest rate risk. Laddering does not necessarily mean you have lower interest rates at the short end. It depends on the where the yield curve is. By fixating on the highest yielding bonds today, and if they are longer term, you are increasing interest rate risk in your portfolio. You can believe that since you are holding to maturity that there is no principal risk, but the fact is your 5 year bond at 4.5% is worth less if rates move higher (and more if they move lower). I would not discount inflationary risk over the next 5 years with the tariffs and tax cuts, and things we cannot even see at this time. If you are trying to maximize returns and have a 5 year or more time horizon, equities are probably a better place to be. The whole point of the fixed income portion of your portfolio is to reduce risk and investment volatility.
1 Like