Business and Personal Finance Dictionary

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• BARBELL STRATEGY
  
  When you use a barbell strategy you buy bonds with widely separated maturity dates, some short-term and others long-term, but none with intermediate terms. That buying pattern creates the shape that gives the strategy its name. For example, you might buy a portfolio of bonds, with some that mature within a year or two and an equal number that mature in 30 years. When the shorter-term bonds come due, you continue the strategy by replacing them with other short-term bonds. Its a different approach from laddering your bond investment, so that your bonds mature in a rolling pattern every few years. The goal of a barbell strategy is to earn more interest than intermediate-term bonds would provide without taking more risk. You may find it especially appealing in periods when youre not sure whether interest rates are going down which might be a reason to buy long-term bonds or going up which might be a reason to buy short-term bonds. Instead, you balance your interest-rate risk by buying some of each maturity.
  
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