GIC Laddering
This calculator compares a laddered GIC strategy to investing in 1 year GICs.
GIC laddering is a strategy of purchasing GICs with different maturity dates and interest rates to help maximize returns,
increase liquidity and reduce reinvestment risk.
Instead of investing $25,000 in a single GIC, break it up so that $5,000 each is invested in five GICs with different terms of
1 through 5 years. When the first term matures after 1 year, renew it into a five year GIC. When the second term matures, renew
it for five years and so on.
Amount invested (maximum value $150,000)
|
25,000
|
| Term | 1 Year | 2 Year | 3 Year | 4 Year | 5 Year |
|
Interest rate
|
1.00%
|
1.25%
|
1.50%
|
1.75%
|
2.00%
|
|
|
Laddered GICs
|
Initial Investment |
Today |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
| $5,000 |
Purchase 1 Yr GIC @ 1.00% and invest $5,000 |
Purchase 5 Yr GIC @ 2.00% and invest $5,050.00 |
||||
| $5,000 |
Purchase 2 Yr GIC @ 1.25% and invest $5,000.00 |
- |
Purchase 5 Yr GIC @ 2.00% and invest $5,125.78 |
|||
| $5,000 |
Purchase 3 Yr GIC @ 1.50% and invest $5,000.00 |
- | - |
Purchase 5 Yr GIC @ 2.00% and invest $5,228.39 |
||
| $5,000 |
Purchase 4 Yr GIC @ 1.75% and invest $5,000.00 |
- | - | - |
Purchase 5 Yr GIC @ 2.00% and invest $5,359.30 |
|
| $5,000 |
Purchase 5 Yr GIC @ 2.00% and invest $5,000.00 |
- | - | - | - |
Purchase 5 Yr GIC @ 2.00% and invest $5,520.40 |
| $25,000 |
Total Interest
|
Year |
Laddered GICs |
1 Year GICs |
Laddered Advantage |
| After 5 Years | $2,332.31 | $1,275.25 | $1,057.06 |
| After 10 Years | $5,177.07 | $2,615.55 | $2,561.52 |
Using laddered GICs would provide you $1,057.06 more after 5 years and $2,561.52 more after 10 years than using 1 year GICs
Investment Value
Disclaimer
