[vladd]

Since bonds are always reaching their promised payout terms upon their maturity, you can manage that risk through proper alignment in maturity dates.

You can purchase multiple bonds that are spread around their term duration. E.g. buy now 1-year bonds, and repeat every 3 months. After 4 such cycles, you will now always have bonds reaching maturity every 3 months.

Or just buy shorter term ones to begin with (if the interest is still appealing), and move to longer term ones once you have enough maturity diversity for the advice in the previous paragraph.

[koliber]

This works if you never need to liquidate early. For most people such a need to get their cash out occasionally happens. Regardless of how you stagger your bonds, if you need to sell before maturity, there is a chance they will be worth less.

[thanksgiving]

The only money if buy a bond with is money I'd put in a certificate of deposit (CD) anyway.

[nly]

You can sell gilts early. There's just a chance of a small loss.

Unlikely ATM while rates are expected to fall.

[FooBarBizBazz]

Bond ladders are almost exactly the same as CD ladders. Bonds and CDs are almost exactly the same thing, mathematically.

The tax treatment is a tiny bit different. T-bill interest is exempt from state/local tax. CD interest is not.

Default risk is the tiniest bit different, but not by much. With the CD, there is some probability that the bank will fail, at which point you then need to wait for the gears of the FDIC to slowly turn to pay you your CD insurance. The FDIC actually doesn't have that much money, so in a sufficiently large bank run the Federal Reserve will have to backstop it. On the other hand, you can just buy a T-bill directly from the Treasury, which is also backstopped by the Fed. So there are some additional middlemen in the case of the CD. Maybe that's good -- more failures in a row are necessary before you get to the Fed. Maybe that's bad -- there are more parties and more bureaucracy involved in the unlikely event of a bank failure. I think you might as well go straight to the Treasury for the high rate and better tax treatment.

(Or I'd plow it into the S&P 500 because T-bills ain't never gonna outpace inflation, no matter what they say the numbers are.)