# My plan, please advise !



## Ben1491 (Jan 13, 2012)

My wife and I has started to withdraw funds from our RRIF. 
Here is my plan. I setup a 5 year GIC ladder. Amount is 10% above the minimum withdrawal each year according the CRA. With this annual withdrawal plus CPP and OAS, it would be more than cover our yearly expense. The rest of the money are all in blue chip divident stocks. I fully know the stock will fluttuate. But from my experience, these stocks usually bounce back within 5 years. If one GIC matured and the market is low, I can hold off the ladder in 5 years time until the market goes up and re-built. Right now the interest rate is just too low not to take a little risk. Will increase the GIC if the interest rate goes above 3% in the future. What do you people think of my plan. Anything I should consider ? Please advise and thanks.


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## lonewolf (Jun 12, 2012)

If you want to be long stocks I would use annuities that do not lose money if the market drops (no variable). Though not sure who will be left standing after this bear market. GICs I like best I think are Manitoba on line credit unions. Go over all expenses & eliminate any that don't add value to your life.


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## GreatLaker (Mar 23, 2014)

What you describe is sometimes known as a bucket strategy. A GIC bucket for short term, and equities for longer term investing. It's a good strategy because it avoids the need to sell equities when markets are down.

This article describes what you want to do in detail:
http://www.moneysense.ca/retire/a-better-way-to-generate-retirement-income/


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## Ben1491 (Jan 13, 2012)

GreatLaker said:


> What you describe is sometimes known as a bucket strategy. A GIC bucket for short term, and equities for longer term investing. It's a good strategy because it avoids the need to sell equities when markets are down.
> 
> This article describes what you want to do in detail:
> http://www.moneysense.ca/retire/a-better-way-to-generate-retirement-income/


Thank you GreatLaker. Took a look at this link and my plan is slightly different. First of all, I do not have bond. And, I am not planning to re-build the ladder if the market is down. I am thinking I have 5 years time frame to do this. Let's say if the market are down for 3 year and recover in the 4th. I'll sell some stocks and re-build the ladder then. Only thing I can think of is I'll get a bit less interest for the first 3 year's GIC.


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## AltaRed (Jun 8, 2009)

Ben1491 said:


> Thank you GreatLaker. Took a look at this link and my plan is slightly different. First of all, I do not have bond. And, I am not planning to re-build the ladder if the market is down. I am thinking I have 5 years time frame to do this. Let's say if the market are down for 3 year and recover in the 4th. I'll sell some stocks and re-build the ladder then. Only thing I can think of is I'll get a bit less interest for the first 3 year's GIC.


Nothing wrong with that, unless the equity markets do not recover in that short a period. The bear of 2008-2009 was a bit of an anomaly, i.e. V shaped. I believe there was something like a 5 year bear market post dot.com crash. When do you start to re-build the ladder in a situation like that. I think it wise to always have some fixed income in a bucket one can tap.... i.e. re-build it when it gets to a certain low level regardless...


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## Ben1491 (Jan 13, 2012)

AltaRed said:


> Nothing wrong with that, unless the equity markets do not recover in that short a period. The bear of 2008-2009 was a bit of an anomaly, i.e. V shaped. I believe there was something like a 5 year bear market post dot.com crash. When do you start to re-build the ladder in a situation like that. I think it wise to always have some fixed income in a bucket one can tap.... i.e. re-build it when it gets to a certain low level regardless...


Thank you AltaRed. Will double up the 1st, 3rd and 5th year ladder to get a better cushion.


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## lonewolf (Jun 12, 2012)

Ben Manitoba on line credit unions often offer GICs longer then 5 years might want to set up ladder so you go with 3yr 4yr 5yr 6yr 7yr then 3yr comes do go out 5yrs the 4th comes do go out 5 years etc. Have to check each online out most of the time one of them goes out 7 years. Although often one will offer 7 years the offer comes of table another one will offer.

Deferred annuity linked to market that increases in value even if market declines here is the best way to play stock market @ the nose bleed levels.


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## lonewolf (Jun 12, 2012)

Should also point out credit unions will often offer interest to compound, paid yearly & sometimes even paid monthly so money can be coming in to live on . Sometimes the monthly is only offered to seniors for retirement needs


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## Ben1491 (Jan 13, 2012)

lonewolf said:


> Ben Manitoba on line credit unions often offer GICs longer then 5 years might want to set up ladder so you go with 3yr 4yr 5yr 6yr 7yr then 3yr comes do go out 5yrs the 4th comes do go out 5 years etc. Have to check each online out most of the time one of them goes out 7 years. Although often one will offer 7 years the offer comes of table another one will offer.
> 
> Deferred annuity linked to market that increases in value even if market declines here is the best way to play stock market @ the nose bleed levels.


Thank you Lonewolf. I have the 5 year ladder already setup. With the market down so much, I'll wait. 
By the way, I see the longest GIC that some of the finance institution offer is 7 year. And the interest is just miserable, even less than 5 year. I might as well double up some year when the market is fully recovered.


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## GreatLaker (Mar 23, 2014)

Note that the maximum GIC duration that is CDIC insured is 5 years.

The paper to which I linked really just advocates a total return approach to investing in the withdrawal phase. Sell equities or fixed income (or from maturing GICs) for current year's cash needs from whatever is the highest relative to it's target allocation. Then rebalance the portfolio back to the target asset mix. So if equities are down they would not be sold to replenish a GIC ladder. I always keep some bond ETFs, for more flexibility than I would get keeping all my FI in GICs.

@ AltaRed re always having some fixed income available to tap. In a traditional 60/40 portfolio with a 4% SWR, there should be enough FI to last a decade. Hopefully that will outlast any bear market, although looking at the great depression and stagflation in the 1970s, markets can get out of whack for a long time.

(Not that I am advocating a 60/40 portfolio or 4% SWR, but just for example)


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