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What is a GIC Laddering Strategy?

A Guaranteed Investment Certificate or a GIC ladder or laddering strategy is a long term investment strategy and can enhance returns in the GIC component of your portfolio, achieving greater growth while reducing risk.

You start by dividing the amount you have to invest into five equal parts and invest five GICs with terms of one, two, three, four and five years. Each year, when a GIC comes due, you reinvest in a five-year GIC. In four years you will have all your money in five-year terms, which generally have higher interest rates than GICs with shorter terms.

In addition to providing greater potential growth with overall higher interest rates, a GIC ladder offers liquidity – ensuring you have access to 20% of your money each year for planned or unplanned expenses. By diversifying maturity dates you also reduce timing risk – the risk of having to reinvest all your money in a year of unfavourable GIC interest rates.

Click here for the video: GIC Laddering Strategy