You will be able to decide what to do with each rung as it matures so the plan stays on track.
Ten months after setting up their ladder, Wei Ling gets an email from the bank: her fixed deposit has matured. It is the rung for the wedding balance, and the wedding is in a month. That part is easy. The same week, a letter arrives saying completion of their flat has slipped by several months, so two rungs need a decision at once. That is normal. A ladder needs someone to make a handful of small decisions, and every one of them falls on a date you can see coming.
Every time a rung matures, you face one of three situations.
If the bill it was meant for is due, spend it. This is the normal case and the reason the rung exists. Wei Ling's wedding rung matures a month before the banquet balance is due, so the money moves to her savings account and is paid from there.
When the bill's date has moved later, roll it forward. Put the money into a new instrument that matures before the new date. If the renovation has slipped by six months, a rung meant for it can go into a six-month T-bill or a fixed deposit with a matching term, rather than sitting idle.
A rung that no bill needs yet can go to the far end as a new rung, if you want the ladder to keep going. That is how a longer-running ladder keeps money maturing at regular intervals, and how it spreads the rates you lock in across different times, as lesson 8.1, What a ladder is and the problem it solves, described.
Make that call a few weeks ahead of the maturity date, so the money can move on the day it lands.
Most ladder mistakes are not bad decisions. They are no decisions, because a date passed without anyone noticing.
Put two kinds of date in your calendar. The first is each rung's maturity date, with a reminder two to four weeks before it so you have time to decide. The second is every application date you might reinvest into: the SSB application windows from lesson 3.2, Applying for an SSB and the limits that apply, and the T-bill auction dates and your bank's closing times from lesson 4.2, How the auction sets one yield for everyone.
Application dates matter because timing between instruments rarely lines up. A fixed deposit might mature two days after a T-bill auction's bank closing time, and then the money waits in your savings account for the next auction. Knowing that in advance lets you choose: wait, use another instrument, or bridge it with other cash.
Fixed deposits are the rung most likely to go wrong quietly. As lesson 5.1, How a fixed deposit works and what protects it, explained, many banks renew a maturing deposit automatically unless you tell them otherwise, often at the board rate, which can be far below the rate you placed it at.
For a ladder, an automatic renewal is worse than a low rate. It can lock your bill money into a new term that runs past the bill's due date, and getting it out then means breaking the deposit. Set every fixed deposit's maturity instruction to pay out to your account, unless you have deliberately chosen to renew for a term you have checked. Then confirm the instruction on the bank's app when you set your reminder.
Some changes should send you back to the ladder. The renovation quote comes in higher than planned. Completion slips, as it did for Wei Ling and Jun Hao. A new bill appears, or an old one disappears. Each of these means re-matching rungs to bills, using the method in lesson 8.2, Match rungs to the dates you need money.
Other changes should not. A news story that rates are about to rise or fall is not a reason to tear up a ladder. The point of the ladder is that each rung is held to its own maturity and the bills are covered whatever rates do. Reacting to every headline turns a plan into a guess, and why rates move is a different course: How the economy hits your wallet: rates, inflation and cycles.
When completion slipped, Wei Ling and Jun Hao changed nothing in a panic. Their key collection rung was in an SSB, so they simply left it there, earning its step-up rates, and noted the new expected date. Their renovation rung was a two-year fixed deposit, still well before the new date, so the only change was to the T-bill they would roll it into later.
Write down the action for each maturity date in your own ladder now. Pick whichever of the three applies, and add the reminders to your calendar while the dates are in front of you.
Write the action you will take at each maturity date in your ladder and set the reminders in your calendar.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).