GIC Laddering For Best GIC Rates.
Improve your cashflow by buying multiple term duration GICs with different GIC rates to take advantage of rising interest rates. In addition, avoid locking in all your funds into one GIC with a low GIC rate by using a GIC ladder.
Todays Best GIC Rates
Today's GIC Rates
| 1 Year | 2 Year | 3 Year | 4 Year | 5 Year |
|---|---|---|---|---|
Why GIC Laddering Works
No one knows what interest rates will be tomorrow or next week. No one wants to be stuck in a GIC with a low interest rate and have to guess what term to choose. GIC laddering will help you reduce interest rate risk for example by not being locked in to a GIC term and missing out on higher rates. Another "risk" it reduces is that it takes away having to guess what GIC term to choose to lock in your money. A GIC ladder effectively gives you flexibility and makes your cashflow better.
The Problem
You have a lumpsum of money you want to invest but are worried about tying it up into one investment for a period of time until the investment matures.
The Solution
Creating a GIC laddering strategy with different terms of maturity e.g. instead of one lumpsum investment of $100,000 you could divide it into 5 investments of $20,000 with different interest rates.
GIC Laddering Example
GIC Years @ interest rate | Investment Amount | Earned Interest | |
|---|---|---|---|
| $20,000 | $420 | |
2Year GIC @ 2.30% | $20,000 | $920 | |
3Year GIC @ 2.60% | $20,000 | $1,560 | |
4Year GIC @ 2.85% | $20,000 | $2,280 | |
5Year GIC @ 3.10% | $20,000 | $3,100 | |
Total | $100,000 | $8,280 |
Now, say after the first year, your GIC matures with income of $420. Add that to the $20,000 and you'll have $20,420 cash available to pay obligations or you could decide that you want to reinvest into another GIC. Let's assume after that year current GIC rates for 4 year maturity are at 3.2%.
If you invest that $20,420 into a 4-Year GIC @ 3.2% your GIC earned income after 4 years would be $2,613.76 which would give you a balance of $23,033.76. So you took advantage of a rise in interest rates as the 4 year GIC after the first year of your GIC ladder is 0.10 higher than the 5 Year GIC.
Buy Your GICs Today
Complete the form and we'll get back to you right away to answer your questions and walk you through to complete the process. We'll send you a secure email to setup a profile to buy GICs securely online. Alternatively, call us at (416)966-0606.
Steps To Start Building a GIC Ladder
Step 1.
Schedule your periodic payments or expenses like quarterly income taxes. You can use a calendar to do this easily to make sure the GIC ladder meets your needs.
Step 2.
Document all your other sources of reliable income such as dividends, employer pensions, annuities and other payments like Old Age Security and CPP. If you're a business, you could also go through this exercise to see when you may need cash available whilst getting a return on your funds.
Step 3.
Determine the timing of these obligations with the different GIC terms available to you to make cash available just before the obligation is due. A GIC ladder can be constructed using different terms from 30-270 days all the way to 5-10 years. It all depends on your needs how you structure the GIC ladder.
Step 4.
Get the best GIC rates from Blue Alpha Wealth for each part of your ladder and plan out how you want to deposit and cash out when you believe you would want to look at new interest rates.
Ready To Get Started With GIC Laddering?
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Here are the steps to complete the process
01
Get in touch with us by calling (416)966-0606 or filling out the form below so we call you back. We'll setup a profile together in your name over the phone and gather relevant information. This is a one-time setup.
02
We verify your email and information then connect your home bank information to your account so when you decide to buy GICs your account is automatically linked to the financial institutions.
03
You can now login 24/7 to our free digital GIC platform to construct a GIC portfolio with CDIC and provincially insured issuers. Banks, credit unions, trust companies. View your GIC certificates, maturity dates, deposit insurance limits & more.
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We give you access to high interest GIC rates from banks, credit unions, trust companies and life insurance companies. All the GICs are insured by the CDIC up to $100,000 and provincially through DICO up to $250,000
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Buy Your GICs Today
Complete the form and we'll get back to you right away to answer your questions and walk you through to complete the process. We'll send you a secure email to setup a profile to buy GICs securely online. Alternatively, call us at (416)966-0606.
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