Decide what to do with each rung when it matures so the plan stays on track.
Ten months after she and Jun Hao set up their savings ladder, Wei Ling gets an email from her bank saying her fixed deposit has matured. That deposit is the rung for their wedding balance, and the wedding is a month away.
A ladder needs someone to make a small number of decisions, and each one falls on a date you can see in advance. The wedding rung is the easy case. It matures a month before the banquet balance is due, so the money goes to her savings account and they pay the balance from there.
The same week, a letter arrives saying completion of their flat has slipped by several months. Now two rungs need a decision at the same time, which is normal. Wei Ling and Jun Hao make no panic changes. Their key collection rung is in an SSB, so they leave it there to keep earning its step-up rates and note the new expected completion date. Their renovation rung is a two-year fixed deposit that still matures well before the new date. The only change is to the T-bill they will roll it into later.
At every maturity you are in one of three situations, and each has its own action. A few weeks ahead of the date, check whether the rung's bill is still due on schedule, then pick the one that fits.
If the bill is due, spend it: move the money to your savings account and pay the bill. This is the normal case and the reason the rung exists.
If the bill's date has moved later, roll it forward. Put the money into a new instrument that matures before the new date, so it does not sit idle. If a renovation were delayed by six months, for example, a six-month T-bill or a fixed deposit with a matching term would fit. The Government issues T-bills with both six-month and one-year tenors, so for a longer delay a one-year T-bill may be the better match. Check the MAS page on Singapore Government T-bills for the current issuance schedule. An SSB rung can simply be left in place when a date slips, because it keeps earning its step-up rates.
If no bill needs the rung yet and you want the ladder to keep going, place it at the far end as a new rung. Extending at the far end is how a longer-running ladder keeps money maturing at regular intervals and spreads locked-in rates across different times, as described in Lesson 8.1, What a ladder is and the problem it solves.
Deciding a few weeks before maturity means the money can move on the day it arrives. Most ladder mistakes come from a date passing unnoticed so that no decision gets made, rather than from a bad decision.
Two kinds of date belong in your calendar. The first is each rung's maturity date, with a reminder set two to four weeks before it. The second is every application date you might reinvest into:
SSB application windows, explained in Lesson 3.2, Applying for an SSB and the limits that apply T-bill auction dates, covered in Lesson 4.2, How the auction sets one yield for everyone your bank's closing times for T-bill applications, also in Lesson 4.2
Application dates matter because the timing between instruments rarely lines up. Say a fixed deposit matures two days after your bank's closing time for a T-bill auction. The money then waits in your savings account until the next auction. If you spot a gap like this in advance, you have three options: wait, use another instrument, or bridge the gap with other cash.
Fixed deposits are the rung most likely to go wrong without anyone noticing. Many banks use automatic renewal: unless told otherwise, they re-place a maturing deposit for a new term, often at the board rate, the bank's standard posted rate. That can be far below the rate you placed the deposit at. Lesson 5.1, How a fixed deposit works and what protects it, covers how this works.
For a ladder, automatic renewal does more harm than a low rate. It can lock bill money into a new term that runs past the bill's due date, and getting the money out then means breaking the deposit.
Every fixed deposit has a maturity instruction, the setting that tells the bank whether to pay out or renew when it matures. Set each one to pay out to your account, unless you have deliberately chosen to renew for a term you have checked. When you add the maturity reminder to your calendar, open the bank's app and confirm the instruction at the same time.
Some changes should send you back to the ladder: a renovation quote that comes in higher than planned, a slip in a completion date, a new bill appearing, or an old bill disappearing. Each one changes a bill's amount or date, or adds or removes a bill. When that happens, re-match rungs to bills using the method in Lesson 8.2, Match rungs to the dates you need money.
News that rates are about to rise or fall should not trigger a revision. The ladder works by holding each rung to its own maturity, so the bills are covered whatever rates do, and reacting to every headline turns a plan into a guess. Why rates move is covered in the course How the economy hits your wallet: rates, inflation and cycles.
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.
Next to each maturity date in your ladder, write what you will do with the money. Then put those dates in your calendar as reminders.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).