New Delhi, Oct. 6 -- When you invest a large sum in bonds or fixed deposits (FDs), you have to pick a tenure. Lock in for five years and you may miss out if rates rise later. Stay short and you may have to reinvest at lower rates if they fall. Bond laddering offers a simple way to navigate both risks.

In a ladder, you split your money across several bonds or deposits that mature at different times, usually a year or so apart. Each maturity is one "rung" of the ladder.

Say you have Rs.10 lakh. You don't put all of it in a five-year bond. Instead, you put Rs.2 lakh each into instruments maturing in one, two, three, four and five years. When the one-year rung matures, you reinvest that Rs.2 lakh in a new five-year instrument. After the fir...