The bullet strategy involves purchasing multiple securities that expire on the same target date, minimizing the impact of interest rate fluctuations and earning good returns. It is simple to implement by determining the yield curve point and staggering asset acquisition dates. The strategy can be used for windfall income and can include any number of securities.
The bullet strategy is based on purchasing several different types of securities over an extended period of time, but with all securities expiring on the same target date. One of the main benefits of the bullet strategy is that it allows the investor to minimize the impact of interest rate fluctuations, while earning excellent investment returns.
Bullet strategies are relatively simple to implement and build. The first step is to determine at which point on the yield curve the investment series should mature. This will help drive the incremental acquisition of additions to the portfolio that will reach maturity on the same target date. Staggering asset acquisition dates means that the risk associated with interest rates is diluted. The investor can get good deals on various bonds and other securities along the way, arranging the maturities to coincide with the desired end date.
One of the advantages of the bullet strategy is that investments are purchased and then reserved until the expiration date arrives. Of course, this means that the funds used to purchase the securities must not be used until the maturity date. However, for people who are thinking of creating windfall income at a certain time, this approach is an excellent solution. Profits from the bullet strategy can be used to make final payments on the property, handle a balloon payment that is due, or finance a college education.
The bullet strategy can be made up of any number of different types of bonuses and other securities. With no limit to the number of assets that can be used as part of this investment scheme, it is possible for the investor to gradually accumulate all the assets necessary to guarantee the desired level of return at any given time. Both small investors and investors in major stocks and bonds can employ the bullet strategy and create an attractive return on investment.
Smart Asset.
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