gic strategy | GIC discussions | Discussion forum

Renew your 5 year GIC ladder on schedule. Guessing interest rates is a mug's game.

I'll be the contrarian here. With low rates for a longer period and the tendency for interest rate volatility at the short end, I would shorten my GIC ladder to 3 years, opting for the best 1-3 year GIC rates available, with the potential to throw in some 15- to 18-month GIC promos, on an equally weighted basis. I would avoid GIC terms of 4 years or longer.

Thus, if I had, say, $200,000 to put into GICs, I'd go:

$50,000 in a 1-year;
$50,000 in a 15-month (with Peoples Trust Company);
$50,000 in a 2 year; and,
$50,000 in a 3 year.

Cheers,
Doug

My GICs are all in my RRSP, soon to be a RRIF. I look for staggered maturities over 5 years to eventually feed my RRIF withdrawals. If I go short now, it means I am going to have to go short later to get back on the 5 year plan. The math almost never works.

GICinvestor said
AltaRed, I guess your laddered RRSP GICs may be in different FIs and or/under multiple FIs in one brokerage or with an investment dealer. Much to my dismay, they all have different rules of where the mandatory RRIF withdrawals come from. You might want to check that out.

My RRSPs are not evenly laddered but when withdrawn they become fairly evenly laddered within my TFSA Account.  

I think AltaRed may have a couple different bank savings accounts held in his own name, but most of his GICs are as you suspect, in his self-directed discount brokerage accounts.

Cheers,
Doug

My GICs are indeed all in one discount brokerage account but from different issuers. I will have one GIC mature each year where the proceeds are enough to cover the minimum RRIF withdrawal. Rinse and repeat for 15-20 years.

I have monkeyed around with my two ladders before when there have been tempting offers for odd numbered periods (ie: a 42 month special or a 50 month special). But when they matured, I went back to proper yearly rungs. It should be noted I am still (barely) in the accumulation phase.

As to guessing interest rates, nah. I've never been that lucky.