GIC Ladder Strategy

When it comes to saving your money, Daily or Variable Savings Accounts typically pay among the lowest interest rates available, which will fluctuate based on the environment, but will offer you the greatest access to your funds. On the flipside, longer-term Guaranteed Investment Certificates (GICs) offer a higher interest rate, which will increase based upon the length of the deposit duration (i.e. 1 year, 3 year, 5 year, etc). When invested, GICs will lock-in your savings and your interest rate will be guaranteed throughout its duration. Should this interest rate be set to reinvest annually within the GIC, these savings will also benefit from the power of compound interest.

The question many savers ask is, “when is the right time to sacrifice immediate access to my savings to benefit by the higher interest rates available through GICs?”

A GIC Ladder is a simple way to maximize your longer-term savings, such as in an RRSP, RRIF or TFSA, which reduces your interest rate risk and improves your returns. The concept is simple. You simply separate your savings into five smaller amounts, and invest them each into a 1 year, 2 year, 3 year, 4 year and 5 year GIC. You benefit by the higher interest rates and you maintain access to one fifth of your savings every year as these GICs reach maturity. Once matured, you can simply re-invest those funds into a new 5 year GIC or use them at your own discretion.


A GIC laddering strategy takes the guesswork out of trying to predict when interest rates will rise. Every year your maturing GIC will be reinvested at the best interest rate offered, and should interest rates fall, only a smaller portion of your savings will be negatively impacted by the decreased interest rates.


If you invest $50,000 for 10 years in Achieva’s High Interest Daily Savings Account at 1.50 per cent annual return (which presumes interest rates won’t change for illustration purposes), your savings will grow to $58,027. By adopting a GIC laddering strategy that same $50,000, would have grown to $60,663 – an 4.54% increase in your total return during the same period!

To set up your GIC Laddering strategy, simply log in to Achieva Online Banking, and click on “GIC Centre”.

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