As you age …. Do a 5 year ladder …. Or a 3 year ladder | Investing | Discussion forum

While there are a few "what ifs" this is some simple arithmetic that shows there is not much difference between and 3 or 5 year ladder.

@AltaRed
Separate feed backs.
Thanks for your excellent input.

Generally, the best overall return would be a 5 year GIC ladder but whether one does that or not depends on the account type, age (maybe), and the variety, if any, of financial institutions used. Also whether one still has the cognitive ability to manage it or one's POA has the time and motivation to manage it.

Yes 5 year may be the best. It also appears, for the last years, that 1 - 5 year GIC's no longer grow in percentage rate by the increment of terms like they used to. No one seems to want to honour the highest rate for 5 years. And as you mention...I have fears of a POA (a daughter) or my survivor would never keep the type of records that I do. Nor would they maintain the excel file/summary. Chances are they might want to farm it out which I would never ever do as long as I remain capable.

Not that I would have GICs myself, but my take would be to use the KISS principle as one ages, meaning fewer institutions and minimal proliferation of the number of GICs. The size of the GICs can be managed to mature as/when funds are needed so I don't see that being an overriding issue, subject to having sufficient funds to have to suddenly fund LTC or similar that will significantly increase living expenses.

I've done the advisor route. And every time he gave me a quick report of % of gain I would ask...where did that come from? Stocks or GIC's .... answer...GIC's. So when I retired I then found this site and went out on my own; all GIC's, all safe, all higher rates and no .25% commission, all accounts are at least $4000 less than the CDIC or CU Insurance rates, and have ensured that any survivor will also not go over those insurance rates. Right now pretty much all non registered funds pay out interest annually and that keeps us in excellent financial condition. And the odd GIC, when needed, gets partially or completely cashed out. And I lost 30% of my pension but over the years has gained so am only out by 10%. My gut feels good about the 3 year ladder as it has some values. And yes the what if's are there, but they will be there as well for any contemplated change.

My mother was 96 when she passed and my bro and I were still working a 5 year GIC ladder for her. We also ensured about 15% of her assets were in an equity mutual fund so that it would juice returns a bit, in addition to being an additional source of funds in event she had to be admitted to LTC.
When she passed, we requested the GICs be 'matured' during the probate process in order for estate disbursements to be made.

We were in a similar situation with my mother in law. My wife is the executor and POA and she had most of her $ with the advisor that we "used" to have. Which worked out good. The advisor did all 5 year GIC's, no laddering, less work for him, rates sucked. We also had $30,000 in a stock that was guaranteed to gain and not lose ... like a bank account that makes .001% interest as a rainy day fund. It was never used. The advisor only cashed in GIC's when the probate letter was handed over. The closing company that the advisor used screwed up and recently sent $800 for the estate and has caused another year of not wrapping up the estate as this caused another tax year to report.

@dougjp
Separate feed backs.
Thanks for your excellent input

Myself, for what its worth, I follow the decades old general advice about shifting investment risk types as ageing happens, ie: less % in the stock market and more cash/MM/GIC/HISA. And I extend that thinking to shortening GIC terms as my wife and I get older. Now I ladder everything in one year terms with a few 18 months and one 2 year (the recent Oaken special rate). As a by-product it's been great for years now re: overall yields, but of course not anymore

Good points! Thanks. And I do think if I do go to a 3 year ladder the exception would be a 4 or 5 year GIC that had an exceptional high rate of return. But if all years go that way....I will then hit a "what if"!!!

Lots of GIC expiries all the time which mostly eliminates the need to take the lower HISA rates. To protect the "cognitive ability to manage" danger, I keep a spreadsheet and a diary going. In simplicity, it's easier to remember when there's and expiry happening every 3 weeks or so. Yes the possibility of forgetting and not managing with no expiries happening for months or years has crossed my mind...

I have an excel spreadsheet that lists every GIC we have by type, sorted by date and FI, grouped by year, and coded with where the funds originated from. And from there, to a front page over all summary that is published monthly. I also run a book type calendar (supplied by my realtor) that has noted maturities and interest payments and holds paper reminders as well. It works good for me.

RetirEd said
GIC-Fanatic: "Holes" in my laddering are caused by picking a non-standard time horizon to take advantage of special rates or circumstances... including filling previous holes.

I try to keep stuff maturing about every 4-6 months is fine, and keep $5-10K relatively liquid (including cashable terms). I use a spreadsheet, of course, and mark all my GICs on my big wall calendar at the start of the year. I also have a "maturities" spreadsheet but it tends to be less used and not always up to date. My bad.  

We are both doing very similar. I am putting less in HISA and more in 30 or 90 lock ins or quarterlies. I was doing 30 day GICS on automatic renewal at Peoples but the 30 day rate no longer exceeds their HISA rate. So all GICS have been collapsed and most $ have been moved away.