Rates Explained: GICs

GIC ladders

Split your money across terms, so a part comes due every year.

Long terms usually pay more, but they lock your money away. Short terms free your money sooner, but usually pay less. A GIC ladder gives you a bit of both1.

$1 yr$2 yr$3 yr$4 yr$5 yr$10,000 split in 5Each year onecomes due

How to build one

  1. Split your money into 5 equal parts. For $10,000, that's five parts of $2,000.
  2. Put one part in each term: 1, 2, 3, 4 and 5 years1.
  3. Next year, the 1-year GIC comes due. Put it in a new 5-year GIC1.
  4. Keep going. After a few years, all your GICs are 5-year GICs (the higher rates), but one still comes due every year.

Why people like it

  • Some of your money comes free every year, in case you need it1.
  • If rates go up, you get to use the new rates every year. If they go down, most of your money is still at the old rates1.
  • Over time you can earn more than with short terms only1.
Today's numbers. A $10,000 ladder at today's highest advertised non-redeemable rate for each term.

Try it with your own amount. The GIC ladder calculator builds one with today's highest rates, in your province, or all at one lender.

Want to plan yours? The GIC and savings planner is a fillable PDF with these chapters and a worksheet for each rung of your ladder.

References
  1. Meridian: GIC laddered strategy