Laddering is a financial term used to describe various concepts, primarily in the retirement planning and securities underwriting markets.

In retirement planning, laddering is a strategy used to reduce exposure to interest rate and reinvestment risk. With this strategy, an individual “ladders” their investments across different bonds or mutual funds with differing maturities, such as yearly or bi-yearly. The individual has portions of their portfolio invested in each maturity so that when one group of bonds or funds matures, the proceeds are reinvested in a new, longer-term bond or fund.

By buying multiple bonds and funds with varying maturities, an individual is able to generate a steady stream of fixed income cash flow. The shorter bond or fund maturities also help to reduce overall investment risk by spreading it out over different investments. By reinvesting the proceeds from the soon-to-matured bonds in longer-term investments, the investor is able to maintain a level of stability and control in terms of their portfolio's income stream.

In the securities underwriting market, laddering is an illegal practice used by insiders to benefit themselves over regular investors. This practice involves artificially driving up or down the prices of securities, usually by offering different shareholders or groups to buy a security at a higher or lower price than other investors. This manipulates the market and gives the insiders the ability to buy or sell at a higher or lower price than other investors.

Laddering is a commonplace financial practice used to achieve a balance between risk and return in retirement investments, while also offering those with insider knowledge an illegal advantage over the general investor community. It’s important to know the differences between each use of the term and abide by all laws and regulations when engaging in securities transactions.