# GIC ladder advice required



## Bruins63 (Jan 18, 2018)

Hi folks...

I’ve been working with a financial institution to create custom GIC rates...we have settled on 1-5 years starting at 3 percent and ending at 4 percent in year 5, with increments of .25 percent in years 2,3,4...

Let’s work with a number of $1M registered assets...currently enuf cash for 3 years set aside...I may use this cash to populate years 1,2,3 for at least some kind of return...

What would you do for a ladder starategy? Put everything in years 3,4,5? Would you tie money up for 5 years at 4 percent? Would u place more in year 5? Thanks folks...


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## like_to_retire (Oct 9, 2016)

I admit I don't understand the rates you've quoted. Are you saying you can get 5 year GIC's at 4% (4% for each of the 5 years held?).

Either way, since no one can predict interest rates, your best return would be a standard 5 year ladder. Buy five GIC's with 1 ,2, 3, 4, 5 year terms. That way, in one year the first GIC will come due and you'll renew with a new 5 year GIC and pick up the latest and highest rates of the day. Continue this every year, until year four when you'll finally have a fully operational 5 year ladder.

ltr


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## birdman (Feb 12, 2013)

Great rates and would be nice to know where you got them? CDIC insured? I do not follow a strict ladder strategy but have spread maturities out to 5 yrs and at first blush would lean towards equally in 3, 4, and 5 yrs and perhaps take say +/- 1/3 of your cash and put it away for say a year.


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## AltaRed (Jun 8, 2009)

like_to_retire said:


> I admit I don't understand the rates you've quoted. Are you saying you can get 5 year GIC's at 4% (4% for each of the 5 years held?).
> 
> Either way, since no one can predict interest rates, your best return would be a standard 5 year ladder. Buy five GIC's with 1 ,2, 3, 4, 5 year terms. That way, in one year the first GIC will come due and you'll renew with a new 5 year GIC and pick up the latest and highest rates of the day. Continue this every year, until year four when you'll finally have a fully operational 5 year ladder.
> 
> ltr


I agree. I have no idea what the OP is trying to accomplish other than what you have articulated. I would definitely stay with CDIC insured issuers as well on that $1 million. With that kind of money, I would actually split it into 10 GICs (one per 6 months) or even 15 GICs (one per 4 months).


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## Bruins63 (Jan 18, 2018)

Thanks folks...to be clear 1 yr 3, 2 yr 3.25, 3 yr 3.5, 4 yr 3.75, 5 yr 4.0

Unsure if CDIC insured...I will assume so for sake of discussion...how would u load up? Thanks


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## Bruins63 (Jan 18, 2018)

AltaRed said:


> I agree. I have no idea what the OP is trying to accomplish other than what you have articulated. I would definitely stay with CDIC insured issuers as well on that $1 million. With that kind of money, I would actually split it into 10 GICs (one per 6 months) or even 15 GICs (one per 4 months).


Thanks for that...never thought of multiples per year...that’s exactly why I posted...


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## agent99 (Sep 11, 2013)

Bruins63 said:


> Thanks folks...to be clear 1 yr 3, 2 yr 3.25, 3 yr 3.5, 4 yr 3.75, 5 yr 4.0
> 
> Unsure if CDIC insured...I will assume so for sale of discussion...how would u load up? Thanks


Still would like to know where rates like that are available.

This site provides current rates at several companies: https://www.ratehub.ca/gics/best-gic-rates

This best we get from BMOIL (annual pay)

Issuer-----------------------------------------	Cashable	-----------Term	-------------------Interest Rate
BANK OF MONTREAL-----------------------	After 30 days-----	1 year-------------	1.500%
BANK OF MONTREAL MORTGAGE CORP	After 30 days-----	1 year-------------	1.500%
BMO TRUST---------------------------------	After 30 days-----	1 yea-------------r	1.500%
BANK OF MONTREAL------------------------------	N/A---------	1 year-------------	2.530%
BANK OF MONTREAL MORTGAGE CORP-------	N/A---------	1 yea-------------r	2.530%
BMO TRUST----------------------------------------	N/A---------	1 year-------------	2.530%
STREET CAPITAL BK------------------------------	N/A---------	1 year-------------	2.520%
BANK OF MONTREAL------------------------------	N/A----------	2 years------------	2.940%
BANK OF MONTREAL MORTGAGE CORP-------	N/A---------	2 years------------	2.940%
BMO TRUST----------------------------------------	N/A---------	2 years------------	2.940%
EQUITABLE BANK---------------------------------	N/A---------	2 years------------	2.920%
STREET CAPITAL BK------------------------------	N/A---------	2 years------------	2.920%
BANK OF MONTREAL------------------------------	N/A---------	3 years------------	3.040%
BANK OF MONTREAL MORTGAGE CORP-------	N/A---------	3 years------------	3.040%
BMO TRUST----------------------------------------	N/A---------	3 years------------	3.040%
EQUITABLE BANK---------------------------------	N/A---------	3 years------------	3.030%
BANK OF MONTREAL------------------------------	N/A---------	4 years------------	3.110%
BANK OF MONTREAL MORTGAGE CORP-------	N/A---------	4 years-------------	3.110%
BMO TRUST----------------------------------------	N/A---------	4 years------------	3.110%
EQUITABLE BANK---------------------------------	N/A---------	4 years------------	3.100%
EQUITABLE BANK----------------------------------	N/A---------	5 years------------	3.270%
CDN WESTERN BK---------------------------------	N/A---------	5 years------------	3.260%


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## AltaRed (Jun 8, 2009)

I don't think they exist for any investment grade rated issuer. Another source for GIC rates is https://www.highinterestsavings.ca/gic-rates/


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## Bruins63 (Jan 18, 2018)

Folks, I’m just looking for some advice, based on my initial post and those mentioned parameters , regardless of who the issuer is...ie. would you lock up a fair sum of $$ for 5 years at 4 percent?


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## like_to_retire (Oct 9, 2016)

Bruins63 said:


> Folks, I’m just looking for some advice, based on my initial post and those mentioned parameters , regardless of who the issuer is...ie. would you lock up a fair sum of $$ for 5 years at 4 percent?


In a ladder with equal parts assigned to 1,2,3,4,5 year GIC's - yes, if it was CDIC insured.

ltr


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## AltaRed (Jun 8, 2009)

Of course. GIC ladder investors like LTR and myself take whatever the 5 year rate is at the time. Anything else is an attempt at market timing. A few years ago, 5 year rates were down to almost 2%. It all works out over at 2.5 year (duration) time. A 5 year GIC ladder will lag in a trend of increasing interest rates and will out perform in a period of decreasing interest rates. 

It could be that 5 year rates are 4+% in 12-18 months if the economy holds/grows, but if a severe bear market hits by then (which is potentially more likely), 5 year GIC rates could be heading back below 3%. It is a mug's game. If even the expert bond market traders don't know, how can a retail investor know (guess correctly)?

For most investors, fixed income is the ballast in a portfolio, i.e. the concrete foundation. As such, one should be looking for 'Return of Capital' rather than return on capital (in real terms).


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## Bruins63 (Jan 18, 2018)

AltaRed said:


> Of course. GIC ladder investors like LTR and myself take whatever the 5 year rate is at the time. Anything else is an attempt at market timing. A few years ago, 5 year rates were down to almost 2%. It all works out over at 2.5 year (duration) time. A 5 year GIC ladder will lag in a trend of increasing interest rates and will out perform in a period of decreasing interest rates.
> 
> It could be that 5 year rates are 4+% in 12-18 months if the economy holds/grows, but if a severe bear market hits by then (which is potentially more likely), 5 year GIC rates could be heading back below 3%. It is a mug's game. If even the expert bond market traders don't know, how can a retail investor know (guess correctly)?
> 
> For most investors, fixed income is the ballast in a portfolio, i.e. the concrete foundation. As such, one should be looking for 'Return of Capital' rather than return on capital (in real terms).


Thanks, I’m looking at locking all my money up, given the market volatility...I can’t stomach it...3.5-4 percent guaranteed is hard to argue with given market volatility...


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## Beaver101 (Nov 14, 2011)

Based on your first post, I would like at least 7.5% in year 5 if I'm guaranteed $75K per year with a $1M deposit. Please tell me which financial institution is offering such a product or contemplating this in the near future ie ye 2018 or I can wait for 2019 even as I'm interested.


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## Bruins63 (Jan 18, 2018)

How are u coming up with $75000? Interest rate in year 5 is 4 percent not 7.5 percent


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## like_to_retire (Oct 9, 2016)

Bruins63 said:


> How are u coming up with $75000? Interest rate in year 5 is 4 percent not 7.5 percent





Bruins63 said:


> Hi folks...
> 
> Let’s work with a number of $1M registered assets...let’s say I require $75k a year pre tax as income...


ltr


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## AltaRed (Jun 8, 2009)

Bruins63 said:


> How are u coming up with $75000? Interest rate in year 5 is 4 percent not 7.5 percent


You are the one that quoted $75k on $1 million investment...not anyone else.


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## Bruins63 (Jan 18, 2018)

AltaRed said:


> You are the one that quoted $75k on $1 million investment...not anyone else.


Thanks...I don’t expect to cover my $75k per year from a 4 percent return...I will draw down on principle...sorry not to be clear...would u load up on year 4 and 5 given the current compelling interest rate? I edited my first post as the $75k/yr confuses things I think...


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## like_to_retire (Oct 9, 2016)

Bruins63 said:


> ...would u load up on year 4 and 5 given the current compelling interest rate?..


No, that's making a prediction on interest rates. No one has any idea what interest rates will do. Best to start a ladder with equal amounts per year, then let it run. Ignore it until a GIC comes due and repurchase another 5 year GIC.

ltr


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## AltaRed (Jun 8, 2009)

As per LTR, I would buy 1, 2, 3, 4, and 5 year GICs at current rates. That is what you do with a 5 year GIC ladder. It is not a difficult concept.


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## Eclectic12 (Oct 20, 2010)

Bruins63 said:


> Thanks...I don’t expect to cover my $75k per year from a 4 percent return...I will draw down on principle...sorry not to be clear...


Is the "draw down on principle" coming from selling the "too volatile" investments?
If there is already cash available to cover three years ... shouldn't the draw down amount be coming from there?

Are any of the registered accounts TFSAs where there will be no tax bill or withholding tax to deal with?

Are there other sources of income that reduce the draw down?




Bruins63 said:


> ... would u load up on year 4 and 5 given the current compelling interest rate?


I wouldn't because that locks you out of any interest rate increases over the next four or five years, especially where you go from volatile investments to straight non-volatile four or five year GICs.


Keep in mind that some GICs can't be broken so you will need to make sure that if you need more capital draw down in a few years, there is some source that is available.


Cheers


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## Bruins63 (Jan 18, 2018)

Eclectic12 said:


> Is the "draw down on principle" coming from selling the "too volatile" investments?
> If there is already cash available to cover three years ... shouldn't the draw down amount be coming from there?
> 
> Are any of the registered accounts TFSAs where there will be no tax bill or withholding tax to deal with?
> ...


Thanks...good point...I need to draw down another $35k per year to cover my expenses if a 4 percent return on $1,000,000. That should come from the 3 years put aside...I will need to re think this...

What I’m trying to better understand is if it as simple as locking in $200k per year across 5 years and go from there...


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## AltaRed (Jun 8, 2009)

Bruins63 said:


> What I’m trying to better understand is if it as simple as locking in $200k per year across 5 years and go from there...


It is that simple. Either 5 $200k GICs or better yet, buy 5 $100k GICs today spread across 5 years, and another 5 $100k GICs in exactly 6 months time spread across 5 years. Then you have a GIC maturing every 6 months catching the then prevailing 5 year GIC rate.


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## Bruins63 (Jan 18, 2018)

AltaRed said:


> It is that simple. Either 5 $200k GICs or better yet, buy 5 $100k GICs today spread across 5 years, and another 5 $100k GICs in exactly 6 months time spread across 5 years. Then you have a GIC maturing every 6 months catching the then prevailing 5 year GIC rate.


Ohhhhhhh, I like that strategy!!!! Clearly I was overthinking this...with your strategy, if there is an emergency, I only need to wait 6 months...nice ladder!!!


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## like_to_retire (Oct 9, 2016)

Bruins63 said:


> Thanks...good point...I need to draw down another $35k per year to cover my expenses if a 4 percent return on $1,000,000. That should come from the 3 years put aside...I will need to re think this...
> 
> What I’m trying to better understand is if it as simple as locking in $200k per year across 5 years and go from there...


Yeah, it's about that simple if you've definitely decided that equities aren't your thing. But remember that the cash thrown off a newly minted 5 year ladder (that starts with a 1,2,3,4,5 year GIC purchases), is lower than a 5 year ladder that is fully matured after 4 years. 

So the 3 years put aside will certainly be required until year 4 when you are enjoying the cash from all 5 year GIC's.

As rates rise (if that's what happens), you'll have 20% of your GIC's coming due each year. If you go for a 6 month ladder, then every 6 months a full 10% will come due. 

Have you really thought through not having any dividend producing blue chip equities in your portfolio? If you buy a Canadian bank or a utility that pays 3.5% - 4.5% of tax advantaged dividend income, it will likely increase that income every year. After a number of years, your yield on cost will be significant - who cares what the share price is. Fortis, for example, just raised its dividend for the 45th year in a row. Its yield on market is about 4.3% of tax advantaged dividends. As those dividends have increased over those 45 years, so has the share price if you ignore the inconsequential short term fluctuations.

ltr


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## Bruins63 (Jan 18, 2018)

like_to_retire said:


> Yeah, it's about that simple if you've definitely decided that equities aren't your thing. But remember that the cash thrown off a newly minted 5 year ladder (that starts with a 1,2,3,4,5 year GIC purchases), is lower than a 5 year ladder that is fully matured after 4 years.
> 
> So the 3 years put aside will certainly be required until year 4 when you are enjoying the cash from all 5 year GIC's.
> 
> ...


Very helpful, thank you...good point on divvy income and the tax advantages...$850k of the $1m is registered...the reason I’m shying away from equities is I can’t get my head and stomach around “who cares what the share price is? I know I would have a hard time sleeping if the $1m went to $500k but with $45k of divvy income...


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## AltaRed (Jun 8, 2009)

Bruins63 said:


> Very helpful, thank you...good point on divvy income and the tax advantages...$850k of the $1m is registered...the reason I’m shying away from equities is I can’t get my head and stomach around “who cares what the share price is? I know I would have a hard time sleeping if the $1m went to $500k but with $45k of divvy income...


If you couldn't handle a 30-50% drop in equity market value, why would you be in equities? That said, that would be the beauty of a 50/50 balanced portfolio. If equities when down 50%, your portfolio only goes down 25%. 

In major bear markets, there will always be some dividend cuts, but for the most part, dividends would likely stay constant for a few years until the economy recovered, earnings recovered and companies can re-start dividend increases. There were some dividend cuts in the 2008/2009 financial crisis but mostly ex-Canada. The key thing is... you can't play in the sandbox without occasionally getting sand in your shorts. Consider what variability you can tolerate and invest accordingly.


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## like_to_retire (Oct 9, 2016)

Bruins63 said:


> Very helpful, thank you...good point on divvy income and the tax advantages...$850k of the $1m is registered...the reason I’m shying away from equities is I can’t get my head and stomach around “who cares what the share price is? I know I would have a hard time sleeping if the $1m went to $500k but with $45k of divvy income...


Remember that with a 50:50 asset allocation, a drop of 50% in equities does not result in a drop of 50% of your one million - right? Only half of your million is affected by the market, and usually only the share price, while the income you receive remains the same.

Maybe 50:50 is too aggressive, so look at 60% GIC ladder and 40% blue chip Canadian dividend stocks. Now a drop of 50% in the market is even less, but you'll enjoy an equity premium over time, and usually those dividends keep increasing every year, so when a drop in equity share prices occurs, it has almost no effect on your income. In fact, those are the opportune time to add to the blue chip stocks.

Anyway, some food for thought.

ltr


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## james4beach (Nov 15, 2012)

Bruins63 said:


> Very helpful, thank you...good point on divvy income and the tax advantages...$850k of the $1m is registered...the reason I’m shying away from equities is I can’t get my head and stomach around “who cares what the share price is? I know I would have a hard time sleeping if the $1m went to $500k but with $45k of divvy income...


The dividend streams can also reduce. It's not something you hear much about from dividend fans, but ultimately the dividends are tied to company health, and there is a correlation between share price and dividends.

"Solid dividend payers" are usually believed to be solid payers right up until the moment they aren't. GE had a tremendously long history of paying dividends until it cut the divs. Citigroup was another reliable dividend stock, until it ceased being one. A Canadian example is Bombardier. In all these cases, the share price and dividends decreased together.

If your 1M (in equities) went to 500K, with such a serious reduction in share price, you would be right to be concerned about the dividends. They might continue unaffected. Stocks are risky... I agree with what AltaRed wrote.


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## Bruins63 (Jan 18, 2018)

Thanks folks...I understand your reasoning for an equity play as part of the portfolio...Question tho, if I can support my lifestyle with a 3 to 4 percent GIC ladder, why would I want to incur any risk?


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## AltaRed (Jun 8, 2009)

But the impact of dividend cuts is relatively small on a broad market basis. Look at XIU distribution payouts through the 2007 to 2010 period for an example. Look at the table on the right hand side of https://www.dividendchannel.com/symbol/xiu.ca/ A small dip in 2009 before creeping back up.


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## agent99 (Sep 11, 2013)

Bruins63 said:


> Folks, I’m just looking for some advice, based on my initial post and those mentioned parameters , regardless of who the issuer is...ie. would you lock up a fair sum of $$ for 5 years at 4 percent?


Only if I knew the GICs were with a reputable CDIC insured company.


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## like_to_retire (Oct 9, 2016)

Bruins63 said:


> Thanks folks...I understand your reasoning for an equity play as part of the portfolio...Question tho, if I can support my lifestyle with a 3 to 4 percent GIC ladder, why would I want to incur any risk?


Because you will have inflation working against you if you rely on GIC's alone.

Alternatively, dividends from companies that have sustainable and steadily growing dividends for the long term will boost your income and yield on cost over time. 

Fpr example, again I'll use Fortis. It's dividend since inception in 1972 has an approximate compound annual growth rate of 7%, which is higher than the average annual inflation rate for the same period. So, if I am receiving $100 in dividends in 1972, then I'll be receiving about $2100 in 2018. The share price will tag along with that to keep the yield fairly constant. The total return compared to a GIC is quite a bit higher.

A GIC asset allocation of 50%-75% will help you maintain your capital and reduce volatility, along with a 25%-50% allocation to solid blue chip dividend stocks to boost your return over time and keep you ahead of inflation.

ltr


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## Bruins63 (Jan 18, 2018)

like_to_retire said:


> Because you will have inflation working against you if you rely on GIC's alone.
> 
> Alternatively, dividends from companies that have sustainable and steadily growing dividends for the long term will boost your income and yield on cost over time.
> 
> ...


Ok, yer sloooooly convincing me to allocate a portion to equities...perhaps 25 percent, financial and utilities...that way I get solid GIC return and 4-5 percent divvy return with banks and utilities...not bad, not bad...may wait for a downturn with the banks as they are riding high...utililities seem a little beat up right now...


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## like_to_retire (Oct 9, 2016)

Bruins63 said:


> Ok, yer sloooooly convincing me to allocate a portion to equities...perhaps 25 percent, financial and utilities...that way I get solid GIC return and 4-5 percent divvy return with banks and utilities...not bad, not bad...may wait for a downturn with the banks as they are riding high...utililities seem a little beat up right now...


I just feel that 100% fixed income will result in a loss at least equal to inflation over time, unless of course you took a portion of your cash thrown off by the fixed income and re-invested it.

If you didn't, you'd have the same principal forever unless you re-invested some of your cash back into it each year..

Take again the example of Fortis. Yes, it's a success story, but not uncommon.

Suppose 45 years ago you put $2500 in a GIC at 4% that threw off $100 cash a year, you'd still have that same $2500 today in principal to invest at 4%. That's fine, but think how much $2500 was 45 years ago. A lot. Inflation has hurt your $2500 over that 45 years unless you put some of your $100 back into the principal.

Now suppose 45 ago you bought $2500 Fortis that paid 4% dividend. But remember they have increased their dividend 7% annual growth rate over that 45 year period. So the dividend has grown to $2100. The share price has kept up and still pays 4%, so your principal is now $52500. (hehe - you can check my quick math)

You need at least some equity to counteract inflation - hopefully.

ltr


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## Bruins63 (Jan 18, 2018)

For my 25 percent equities, I’m thinking the big 5 banks, BCE, Telus, and Emera...all fairly safe bets...


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## robfordlives (Sep 18, 2014)

All those have enormous amounts of debt which will severely impact their EPS moving forward along with likely compression of PE ratio as the "risk free" return trends higher people don't want these bond proxy like investments. Having said that some/all??? of that should be priced in the shares already.

For people with ladders, are you purchasing your individual GIC's with one institution or are you shopping for rates? I'm with Itrade so fortunately they offer GIC's from a bunch of different spots all with CDIC of course. Is it really worth moving a large amount of $ to another institution for 0.1 or 0.2% more?


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## like_to_retire (Oct 9, 2016)

robfordlives said:


> For people with ladders, are you purchasing your individual GIC's with one institution or are you shopping for rates? I'm with Itrade so fortunately they offer GIC's from a bunch of different spots all with CDIC of course. Is it really worth moving a large amount of $ to another institution for 0.1 or 0.2% more?


I just buy all mine through TDDI. They have a list of GIC's they sell. I'm not too interested in having money all over the place. It's nice to have it all under one roof.

ltr


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## lonewolf :) (Sep 13, 2016)

Bruins63 said:


> Very helpful, thank you...good point on divvy income and the tax advantages...$850k of the $1m is registered...the reason I’m shying away from equities is I can’t get my head and stomach around “who cares what the share price is? I know I would have a hard time sleeping if the $1m went to $500k but with $45k of divvy income...


 If registered if you split the GICs up into one maturing every month you will have to pay going rate $50- $100 transfer fee (which could increase in future) if you find a higher rate @ another FI. 

In the spring I took a 4 day trip near TO to get 4% interest on 5 yr GIC @ a credit union if I had a just a small amount of money come due the trip would not have been worth it. By having a larger amount come due I made maybe an extra .75%


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## lonewolf :) (Sep 13, 2016)

Bruins63 said:


> Thanks folks...I understand your reasoning for an equity play as part of the portfolio...Question tho, if I can support my lifestyle with a 3 to 4 percent GIC ladder, why would I want to incur any risk?


 You dont.

I would avoid stocks instead put a small amount in gold


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## AltaRed (Jun 8, 2009)

lonewolf :) said:


> If registered if you split the GICs up into one maturing every month you will have to pay going rate $50- $100 transfer fee (which could increase in future) if you find a higher rate @ another FI.


Why would one remotely consider moving money if one has it all in one discount brokerage account with a long list of issuers? There is just no value in moving money for 25bp.


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## My Own Advisor (Sep 24, 2012)

Bruins63 said:


> Folks, I’m just looking for some advice, based on my initial post and those mentioned parameters , regardless of who the issuer is...ie. would you lock up a fair sum of $$ for 5 years at 4 percent?


It depends 

What is your goal?

If you already have 3 years of expenses in cash set aside, I would question locking up money for up to 4 or 5 years. 

Why not a 1-3 year GIC ladder? 

I would consider a DIY GIC ladder (do it on your own) of 1-3 years if you want safety and CDIC.


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## lonewolf :) (Sep 13, 2016)

AltaRed said:


> Why would one remotely consider moving money if one has it all in one discount brokerage account with a long list of issuers? There is just no value in moving money for 25bp.


 The difference can be a lot more then 25bp. Are all credit unions on that list ? Since credit unions are member owned there is skin in the game how money is invested which makes them safer with rates usually higher as billions are not going out as profits instead go back to the members.


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## AltaRed (Jun 8, 2009)

Having registered accounts scattered across multiple institutions makes no sense at all. As you already suggest, being captive at a small institution and then having to transfer out at substantial cost makes no sense. The differences are truly only about 25bp as indicated on this chart https://www.highinterestsavings.ca/gic-rates/ many of which are credit unions that are at least regionally based, if not nationally based. Remember that most CUs can and will only serve local (provincial) customers, and it is only their online offerings that can entertain cross-provincial customers. I, in BC, cannot be a member of a MB credit union. I can only access MB credit union online offerings, so why would I want to bother with them?

On that chart, alternative mortgage lenders Oaken Financial (Home Capital) and EQ Bank (Equitable Group) have the highest GIC rates, albeit sometimes institutions don't have the same GIC rates in RRSP/TFSA (sometimes more, sometimes less) as they do in non-registered accounts. The Home Trust and Equitable Bank sister offerings (to these retail direct companies) in discount brokerages today are ~30 bp less.... just a bit over the amount of the 25bp commission the discount brokerage gets to offer said GICs. There simply is not enough difference for me to even consider getting caught up in a CU offering, or to open a direct account with Oaken Financial or EQ Bank.

You have to take your CU blinders off and look at things more holistically.


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## agent99 (Sep 11, 2013)

We only have fixed income in registered accounts - actually in RRIF. It is not that easy to transfer money in and out of RRIFs, especially just to to chase better interest rates. Our FI is just a buffer and it will stay in our RRIFs until there is nothing else to withdraw. So our GICs (very few) are bought from BMOIL. 3.2% for 5yr at present, but going up it seems.


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## AltaRed (Jun 8, 2009)

agent99 said:


> We only have fixed income in registered accounts - actually in RRIF. It is not that easy to transfer money in and out of RRIFs, especially just to to chase better interest rates. Our FI is just a buffer and it will stay in our RRIFs until there is nothing else to withdraw. So our GICs (very few) are bought from BMOIL. 3.2% for 5yr at present, but going up it seems.


This morning Scotia iTrade was 3.27% for Equitable Bank and 3.26% for Home Trust (the basis of my post #43 compared to the GIC chart at highinterestsavings.ca (3.6% for Oaken Financial and 3.5% for EQ Bank)). The highest CU rate on that list is Ideal Savings at 3.36%, a potentially shaky MB CU, hardly a premium over what Scotia iTrade is offering.


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## like_to_retire (Oct 9, 2016)

AltaRed said:


> This morning Scotia iTrade was 3.27% for Equitable Bank and 3.26% for Home Trust (the basis of my post #43 compared to the GIC chart at highinterestsavings.ca (3.6% for Oaken Financial and 3.5% for EQ Bank)). The highest CU rate on that list is Ideal Savings at 3.36%, a potentially shaky MB CU, hardly a premium over what Scotia iTrade is offering.


TDDI todays highest rates are:

Equitable Bank = 3.27%
HomEquity Bank = 3.25%
CTC Bank = 3.27%
Canadian Western Bank = 3.26%
Manulife Bank = 3.25%

ltr


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## AltaRed (Jun 8, 2009)

The same at BMO IL as at TDDI. This CU thing is overall a red herring, especially given the limitations of offerings, and other than certain online offerings, geographic restrictions and online interfaces.

I do understand those who wish to go to Oaken Financial and EQ Bank, the retail arms of Home Capital and Equitable Group due to the range of offerings they have, e.g. HISAs, chequing, etc. Even I have an account with EQ Bank for my HISA holdings.


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## Koogie (Dec 15, 2014)

For those of us with our FI in non registered accounts, it is a worthwhile endeavour. It is not to hard to keep track of 5 (or 10 in my case) 5 year investments.
If you can write a grocery list, you can track a GIC ladder.


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## lonewolf :) (Sep 13, 2016)

AltaRed said:


> This morning Scotia iTrade was 3.27% for Equitable Bank and 3.26% for Home Trust (the basis of my post #43 compared to the GIC chart at highinterestsavings.ca (3.6% for Oaken Financial and 3.5% for EQ Bank)). The highest CU rate on that list is Ideal Savings at 3.36%, a potentially shaky MB CU, hardly a premium over what Scotia iTrade is offering.


 @ least 2 CU have offered GICs paying 4 % @ some point during 2018. I do not think any other type of FI has offered a 5 yr GIC @ that high of a rate @ any point in 2018.

Right now Meridian Credit union is offering 3.75% on 5 yr. If went to each CU website might find something even higher.

MB CU are a lot more financially sound then a bank that is exposed to bubbled up real estate in TO & Vancouver. CDIC insurance makes the banks weak


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## AltaRed (Jun 8, 2009)

Then https://www.highinterestsavings.ca/gic-rates/ is not up to date, the basis of which I make all comparisons. Obviously I should not assume.

One has to make their own personal decisions on whether they wish to chase rates, and where, and whether they trust, provincially backed (sometimes) deposit insurance. I don't... so I pay zero attention to them.


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## Koogie (Dec 15, 2014)

And yet you will buy individual corporate bonds, which I consider far riskier than provincially backed term deposits. Especially if you chase yield down the alphabet (can't recall if you buy B++ bonds)


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## AltaRed (Jun 8, 2009)

I have bought as low as BBB+ in the past, when I needed to do so to get the yield (3+%) I could not get with GICs anywhere (5 yr GICs were in the low 2% range). As of about a year ago (bit more?), that is no longer the case now that GIC rates have increased. As each bond matures, I buy GICs and if I buy GICs, I have the option to have them CDIC insured. Why not when I can do so?

Added: I should add that what one wants a GIC ladder (or fixed income component) to do for them is the important thing. It will vary depending on the individual. For me, it is:
1. Ballast for the portfolio to supplement X years of living expenses to get through a multi-year equity crisis
2. For those X years of support, I currently need to have circa 10% of my portfolio in true fixed income (not counting prefs). About 85% of my portfolio is in equities. The absolute amount in fixed income is the important number, not the percentage. If equity markets continue to climb, my asset allocation will become even more skewed. If we enter a bear market, my asset allocation will turn the other way.
3. All I want from my fixed income is for it to essentially be 'flat' on a real post-inflation, post-tax basis, i.e. Return OF Capital, not return on capital
4. Some liquidity - so about 2/3rds of it is in a 5 year ladder, and the rest in HISA savings accounts, e.g. EQ Bank, and brokerage ISAs such as DYN5000 and DYN5001 at Scotia
5. Absolute minimization of proliferation of accounts, i.e. virtually all of my fixed income must be in my brokerage accounts (my EQ Bank HISA being the exception). I have no interest in chasing CUs, Oaken Financial, or the like.

Others may well have different strategies for their fixed income, needing a 'real return'.


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