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Loonie said
I'd like to know more about rodeworthy's "horizontal strategy". What does that mean?

I was curious too, so I searched google and funny enough a post of theirs came up:

https://www.highinterestsavings.ca/forum/gic/equity-credit-union-gta-gics-5-for-2-to-5-yrs/#p76603

Rodeworthy said

I only buy 1-yr and 2-yr GICs. My plan is to begin a "horizontal" ladder over the course of 12-mo. with a 1 and 2 yr GIC each month starting in September can now begin. This plan worked well for us in the 2015-18 period. Interest rates are better now and we can up the principal for each GIC this time around.

Rationale? "Old people should not climb high ladders".

A friend has done the same thing - creating a "horizontal ladder" with one and two year GICs. In addition, they selected monthly interest payment so they can, if they wish, add the interest received to the next GIC - which is a good strategy if interest rates maintain or increase while the ladder proceeds. Equity CU rate of 5% for 2 years is very good. Of course if one chooses monthly interest payout, the rate would be a bit lower but still good.

dougjp, exactly same story for me lately, including your last paragraph! Just cherry pick a top 1 year rate when someone's offering a juicy rate.

canadian.100 said

phrank said

Rodeworthy said
I only buy 1-yr and 2-yr GICs. My plan is to begin a "horizontal" ladder over the course of 12-mo. with a 1 and 2 yr GIC each month starting in September can now begin. This plan worked well for us in the 2015-18 period. Interest rates are better now and we can up the principal for each GIC this time around.

Rationale? "Old people should not climb high ladders".

At what age do people think that ladders should perhaps no longer be used - 65? 70? 75? 80? 85? I don't have an answer if friends whom I am assisting in their investing - GICs and stocks ask me.
Some of them don't depend on their ladders for regular income so in their case what difference does it really make. If they do not survive until the due date of the GIC, so it gets cashed and goes to their beneficiaries.  

Assuming, as in my case, all GICs are in joint names. What happens to the GICs if (a) the primary holder a.k.a. tax payer dies or (b) the secondary holder dies? In those situations, especially when the only financially knowledgeable person dies, the main need for the other becomes access to cash.

I don't know. Maybe my logic for staying all short term turns out to have no logic to it?

althisa wrote in post 18:
"Thank you. That is a new discovery to me.
So the posted rates for GICs i.e 2 yr and 3 year, the durations you lock the GIC in for is actually a choice made within a range e.g 24 to 35 months.
Does that apply to all FI GICs or is Motive an exception?"

Motive is the only FI that I know of listing their GIC terms this way. I wanted a 3 year GIC for my ladder and 35 months looked like a better choice.

I believe Motive offers another benefit to those over 57, monthly interest paid at the same rate as annual pay interest. From their website; "On Motive GICs with a term of at least 12 months, customers over the age of 57 also have the option of having interest paid monthly into a Motive Savings account."

To get monthly pay I had to call. The phone response from Motive was important to me and Motive did okay in my opinion.

I deal with several FI and I have tried many more. I now include a local (Stratford, Ontario) GIC broker in the mix, after learning about GIC brokers on this forum.

Bill said
Far as I know joint GICs just carry on in survivor's name, whether was primary or secondary.
…

That's essentially what happens.

GIC issuer is provided proof of death of the joint tenant and a signed statement from the survivor or the survivors supporting the removal of the deceased's name from the GIC. Issuer deletes the deceased's name and the GIC continues with one less owner.

phrank said
I was curious too, so I searched google and funny enough a post of theirs came up:

https://www.highinterestsavings.ca/forum/gic/equity-credit-union-gta-gics-5-for-2-to-5-yrs/#p76603

Rodeworthy said

I only buy 1-yr and 2-yr GICs. My plan is to begin a "horizontal" ladder over the course of 12-mo. with a 1 and 2 yr GIC each month starting in September can now begin. This plan worked well for us in the 2015-18 period. Interest rates are better now and we can up the principal for each GIC this time around.

Rationale? "Old people should not climb high ladders".

Loonie said
I'd like to know more about rodeworthy's "horizontal strategy". What does that mean?
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Another view is that one should aim to have GICs of similar amounts coming due on a regular basis, for income - every month or quarter etc.

phrank, I was both amused and somewhat startled to learn that your Google search located a post of mine on this forum. I know Google's search engine is powerful but that was an eyeopener

Thanks for bringing that forward. I will add a bit more below to report how the project is doing.
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Loonie, you have it right. The objective of this project is to have GICs of equal amount principal invested each month for 12 months. I am placing a 1-year and 2-year GIC in each of those months. At the end of the first year the maturing 1-year GIC of each month will be invested again as a 2-year GIC. Only the principal will be reinvested - the interest will be retained in Savings accounts and hopefully we will find some way to spend it 🙂

One could do this with only 1-year investments or 3-year. Whatever works for you. I just don't want to look out 5-years and only do the re-investment on a yearly basis. Many variations work but the object is to keep your feet on the ground and not look too far into the future.

That means there should be 24 GICs for the project. Why do we have 32?

Well, sometimes there are complications. Some of these investments involve registered money which, obviously, are not joint. It was necessary to use 4 investments per month with a 1- and 2-year investment for RIF and TFSA GICs. The principal for these were halved to keep the total the same as other months. Another wrinkle. The RIF money we placed with Oaken in December had the minimum payout extracted from the RIF GICs the following month (January). To keep the total principal invested on track we took out unregistered GICs for the payout amounts. Once again, Oaken's lack of savings accounts for registered money confuses things.

And we had some US$ lying around that I could not resist getting the much improved rates so that added 2 more.

This may not work for everyone. Obviously there is a period of deferred income for the first year and the second year will pay out monthly only the interest earned in a 1-year GIC. If money is tight and you need income for living expenses this may become unworkable.

We have completed the first year of investing new money as of August. In September, we began the process of reinvesting the matured 1-yr investments into a 2-year GIC. I have decided to delve further into our cash account and make another monthly payment available so I can negotiate a new investment for any month without regard for the investment maturing that month. When it does mature it will be used for the next month's purchase. This way we can pick and choose the right investment for the right time of that month.

I hope that covers it. Sorry this is so long. Any questions, fire away.

Thanks for the detailed explanation, rodeworthy. Wow!

I understand what you are doing, and wish you well.

I think I would find it too much work to follow your plan, but it could be modified. As I age, I will be even less likely to want to do all the work involved. I am always looking for ways to decrease the workload and the number of FIs I deal with, with minimal financial sacrifice. It would be easier and faster if I didn't have significant vision problems or if spouse were adept at this.

My current compromises: not so many GICs; use FIs that have higher insured limits or no limits (CUs); and use deposit broker when it makes sense so I have less work to do (and rates are still very good). I am less concerned about having GICs due monthly or having the interest available. I do prefer annual payout as it makes it easier to manage insurance limits. I find our expenses vary enough from month to month that having regular monthly interest doesn't matter, but it will give you a more regular ladder. Some months we don't even spend our guaranteed fixed income.
Our asset s continue to increase faster than we can spend them. Not a bad thing at our age (mid 70s), and we are enjoying giving some of it away.

Plans are made to be revised, and I imagine we will see several more iterations!