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Email this9:45 am
February 20, 2018
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Do you buy the theory forget interest rates and just ladder for 5yrs?
Is rolling over every 2.5yrs the midpoint term similar as 5yr ladder?
I see "deal" investing seeking out the best rates as the way to go. Sometimes 2yr rates at CUs for example are consistently better than 5yr rates at the larger banks..
10:18 am
May 28, 2013
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I have not done GIC laddering. I prefer to put my cash into whatever HISA is being offered at a good rate. That said, if there are special offers for GICs such as the exceptional 4% deal at Coast for 33 months, or the short term 3.33% deal at EQ for 3 months, both of which exceed the HISA rates, I will park money there for that time.
I do not like the 5 year GIC rates, especially at a time of rising rates - I do not want to be locked in for that long. I prefer the flexibility, even if the HISA rate is a bit lower at times.
I can see laddering being useful for someone who just wants to park their money and not think about it too much.
11:43 am
November 19, 2014
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I run two concurrent full GIC ladders. All rungs are at "5 year" rates and my compound rate of return is 3.39% for an average age of what.. 2.5 - 2.8 yrs.
I believe in ladders but must admit to being tempted from time to time by short term deals. In reality though, you are just pushing your guess on interest rates out by a few years when you buy one.. you might win, you might lose.
Either way, the premise of ladders is solid and when you have a butt load of fixed income like I do it makes sense. Certainly feel more comfortable with them than I am with bonds.
6:35 pm
February 20, 2018
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Koogie said
my compound rate of return is 3.39%
tang historical rates
https://www.tangerine.ca/en/rates/historical-rates/index.html
7:03 pm
November 7, 2014
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Koogie said
I run two concurrent full GIC ladders. All rungs are at "5 year" rates and my compound rate of return is 3.39% for an average age of what.. 2.5 - 2.8 yrs.I believe in ladders but must admit to being tempted from time to time by short term deals. In reality though, you are just pushing your guess on interest rates out by a few years when you buy one.. you might win, you might lose.
Either way, the premise of ladders is solid and when you have a butt load of fixed income like I do it makes sense. Certainly feel more comfortable with them than I am with bonds.
We also believe in the laddering of GICs. We want safe investments at the best rate available, usually for 5 years. Everything is insured in one way shape or form. Although we may think we can read the market's tendencies, all it takes is one major market setback and the anticipated rate increases fizzle. We try very hard to make sure we have a balanced amount of investment maturing every year, so that there will always be money available if needed.
When you are on a 5 year ladder, the 5 year rate is often the best rate. We don't believe in trying to predict the rate increases. Could end up with too much maturing in one year and not enough the next. Sometimes there is an odd period investment rate available, like Pace CU's 29 months @ 3.40%, which may fit into our plan for balancing the annual maturities, without disrupting my laddering, but for the most part, we stick to 5 year GICs. Often it depends on what's maturing and what rates are available. To be sure, if we have an investment maturing a few days prior to an anticipated rate increase announcement, we will wait a little longer to reinvest. Just makes sense.
7:34 pm
October 21, 2013
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I keep about 1/3 in ladders, 1/3 in rate offers I like that come along, and 1/3 in HISAs. These proportions fluctuate somewhat from year to year.
I have a specific need for keeping a relatively large proportion in HISAs, but this would not be true for everyone, and I don't recommend it for everyone.
Ladders are a great theory but sometimes it can be hard to stick to when you are living with the effects of some of the low rates you had to lock into 2 years ago, and current rates appear to be on the rise. They work best when rates remain relatively stable and when there is a good spread between one-year and five-year rates. It's a lot like the stock market in the sense that you can't time the rates or the markets.
It's not about timing the GIC purchase; it's about time IN the GIC!
Even ladders should not be expected to provide the same income every year. It will always fluctuate somewhat. If you want a consistent income from your money, you should perhaps consider annuities.
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