[AltaRed]

Indeed. Digitalatlas should WANT to have separate timing on the 2nd ladder to have something mature every 6 months or so.

I have 10 holdings in a 5 year ladder in one RRSP at my discount brokerage, which ideally should have something come due every 6 months. It is not perfectly aligned for the primary reason that a corporate bond or debenture isn't necessarily aligned for 6 month intervals, but I don't care. What is more important is having 2 maturities every calendar year, rather than perfection every 6 months.

 

[like_to_retire]

Indeed. Digitalatlas should WANT to have separate timing on the 2nd ladder to have something mature every 6 months or so.

I have 10 holdings in a 5 year ladder in one RRSP at my discount brokerage, which ideally should have something come due every 6 months. It is not perfectly aligned for the primary reason that a corporate bond or debenture isn't necessarily aligned for 6 month intervals, but I don't care. What is more important is having 2 maturities every calendar year, rather than perfection every 6 months.

Yeah, mine aren't perfect by a long shot, but I do my best and it always seems like one's coming due. Getting continual 5 year rates with the cash coming liquid every 6 months is one of the few freebies you can get in investing.

ltr

 

[james4beach]

Mine are not perfectly spaced either. Overall, the GICs are spread out over 5 years. I typically have 2 or 3 maturing each year. I really like it when 3 mature in a year, as it feels like there's constantly cash & great liquidity.

LTR nails it when he says it's getting continual 5 year rates with cash just about always available. You get to have 5 year GIC yields *and* liquidity.

It may not be too impressive with the current flat yield curve, but under more normal circumstances this is an incredibly sweet arrangement.

 

[Beaver101]

Mine are not perfectly spaced either. Overall, the GICs are spread out over 5 years. I typically have 2 or 3 maturing each year. I really like it when 3 mature in a year, as it feels like there's constantly cash & great liquidity.

... doesn't this get too much to track if its more than one 5-year GIC ladder? Plus with different investment (maturity) dates? And possibly at different banks/financial institutions?

 

[like_to_retire]

... doesn't this get too much to track if its more than one 5-year GIC ladder? Plus with different investment (maturity) dates? And possibly at different banks/financial institutions?

Ahhh, come on Beaver. Anyone can create a spreadsheet to track their ladders if it's greater than a simple 5 GIC system.

If you're going to invest on your own, then you have to understand how to create a spreadsheet.

If not, then get an advisor (who's job is to use your money to fund their retirement).

ltr

 

[Beaver101]

LTR, surely you're jesting about getting an advisor for GICs. I understand spreadsheets are very useful (and I have no issue with creating with/using Excel) but I would rather rely on my memory cells instead. So when I also saw AltaRed's mention of 10 holdings on a GIC alone ... wowzie ...

 

[AltaRed]

LTR, surely you're jesting about getting an advisor for GICs. I understand spreadsheets are very useful (and I have no issue with creating with/using Excel) but I would rather rely on my memory cells instead. So when I also saw AltaRed's mention of 10 holdings on a GIC alone ... wowzie ...

It's not hard. It's only 2 maturities a year and those dates are shown on my brokerage statement as well. Nothing to it!

 

[like_to_retire]

LTR, surely you're jesting about getting an advisor for GICs. I understand spreadsheets are very useful (and I have no issue with creating with/using Excel) but I would rather rely on my memory cells instead. So when I also saw AltaRed's mention of 10 holdings on a GIC alone ... wowzie ...

Yeah, I was kinda jesting after your post that said: "... doesn't this get too much to track if its more than one 5-year GIC ladder?".

I figured if more than 5 GIC's was too much to track, then you better get an advisor.

I'm confused what your point here is?

ltr

 

[james4beach]

... doesn't this get too much to track if its more than one 5-year GIC ladder? Plus with different investment (maturity) dates? And possibly at different banks/financial institutions?

This is why I keep them all at the same brokerage (Scotia iTrade). I've found it easy to manage.

If I was closer to hitting the CDIC limits then it could get tricky, but I'm at smaller amounts.

 

[like_to_retire]

This is why I keep them all at the same brokerage (Scotia iTrade). I've found it easy to manage.

If I was closer to hitting the CDIC limits then it could get tricky, but I'm at smaller amounts.

Yeah, it definitely makes it easy if you just keep them all at your brokerage. I don't personally feel there's much advantage to farming GIC ladders out to all the various institutions to gain small percentage gains. It's just not worth it. Fixed income isn't the place to try and make money. It's the place to preserve your capital. It's far more advantageous to spend that time on equities. That's where money is to be made.

I would sure like to see them raise that $100K CDIC limit.

ltr

 

[frase]

Yeah, it definitely makes it easy if you just keep them all at your brokerage. I don't personally feel there's much advantage to farming GIC ladders out to all the various institutions to gain small percentage gains. It's just not worth it. Fixed income isn't the place to try and make money. It's the place to preserve your capital. It's far more advantageous to spend that time on equities. That's where money is to be made.

I would sure like to see them raise that $100K CDIC limit.

ltr

I agree that its a nuisance but figure its worth it as my best guess is that it puts another $5,000. PA in my pocket. With perhaps 2 GIC's maturing a year it probably takes me less than an hour to research rates and as I already have accounts at these institutions (Oaken, Achieva, BNS, and a couple of others) the purchase is pretty simple. Maybe its my broker (Qtrade) whose best 5 yr rate is 2.35% and there is only one institution offering it?

 

[Beaver101]

Yeah, I was kinda jesting after your post that said: "... doesn't this get too much to track if its more than one 5-year GIC ladder?".

I figured if more than 5 GIC's was too much to track, then you better get an advisor.

I'm confused what your point here is?

ltr

... J4B and you provided the answers in your subsequent posts. KISS.

 

[MrMatt]

Also a GIC ladder doesn't have to be GICs, it could be appropriate risk bonds etc.

The thing is with the GIC ladder is simplicity.
You get pretty decent mix of access and the longer rates.

 

[AltaRed]

Correct. I actually have a mix of GICs, debentures and bonds, but all are structured with maturity dates into a 5 year ladder.

 

[james4beach]

I just looked at GIC rates this morning and yeah, it certainly is disheartening that the best 5 year rates are lower than the cash rate at my credit union. I get a steady 2.4% at Outlook Financial, not promotional.

But I'm going to push myself to stick to the 5 year GIC method instead of assuming I can strategically trade between cash & bonds. I just have to remind myself that I have a very poor history of timing the bond market (I've tried this before, unsuccessfully).

This bizarre and uncomfortable situation of cash yielding more than something down the yield curve is just one example of the various things that go horribly wrong with an inverted yield curve. It's not a good situation.

 

[frase]

I have always had good success with Achieva which currently is at 2.75%. Mind you, I limit my exposure to them to 100-150,000.
https://achieva.mb.ca/rates

 

[like_to_retire]

I have always had good success with Achieva which currently is at 2.75%. Mind you, I limit my exposure to them to 100-150,000.
https://achieva.mb.ca/rates

So you go over $100K? What are your thoughts on that.

All my GIC's that I get from TDDI are around $100K now, so I'll have to start back on bonds. I was contemplating stretching to may $125K, then with about 10-12 issuers I could add more to each one as it came due. I usually take the opportunity on maturity of every GIC to correct my asset allocation somewhat as the fixed income starts to lag behind the equities as time passes. I would rather just add to GIC's rather than switch to bonds as the GIC's just pay so much more than bonds unless you want to accept quite a bit more risk.

It would be great if they would raise that pesky CDIC limit to $250K.

ltr

 

[digitalatlas]

You guys have raised an interesting point that I hadn't considered, about having separate ladders to actually increase liquidity. I think 2 ladders is reasonable, in terms of ease of management. Having more than that, even though not terribly onerous, starts to get contrary to the goal of having a simple fixed portion of one's portfolio.

My dilemma now is, as I mentioned before, my anniversary date for the existing ladder is in a couple weeks. Should I then, wait to start the new ladder in a few months??? Seems like it doesn't make a whole lot of sense, and if so, where should I keep that money for the time being?

Seems like staggering the ladders is desirable if that's when you happen to want to invest, but it's not necessary to artificially create a staggered situation. Would you agree on that perspective?

Also consider, I keep about 5% of the value of the overall portfolio in cash (outside, not a proportion of the portfolio), which can provide for a year or two of cashflow under normal circumstances. And 20% of the portfolio is in bond ETFs, which can be sold if necessary. Is that enough liquidity it probably doesn't matter if maturity only comes around once a year?

 

[Eclectic12]

... My dilemma now is, as I mentioned before, my anniversary date for the existing ladder is in a couple weeks. Should I then, wait to start the new ladder in a few months??? Seems like it doesn't make a whole lot of sense, and if so, where should I keep that money for the time being?

Unless there's going to be withdrawals sometime soon that might require a different timing, I'm not sure a shift in timing of couple of months will matter all that much one way or the other.

It's definitely a risk though.

If you do decide to lock up the money now instead of waiting for a better timing, the question will be when does it make sense to wait?
Personally, if rates are low now and deposit accounts like EQ bank can get almost the same - I'd wait the couple of months before locking the money up. There's low rates at the moment with lots of turmoil to possibly keep them low so this may be a reasonable time to delay.

... Seems like staggering the ladders is desirable if that's when you happen to want to invest, but it's not necessary to artificially create a staggered situation. Would you agree on that perspective?

IMO the staggering is important to line up the potential times of available cash with either the times of expense or to delay when taxes start being due.

... Also consider, I keep about 5% of the value of the overall portfolio in cash (outside, not a proportion of the portfolio), which can provide for a year or two of cashflow under normal circumstances. And 20% of the portfolio is in bond ETFs, which can be sold if necessary. Is that enough liquidity it probably doesn't matter if maturity only comes around once a year?

Sounds reasonable ... but you are the one who knows your expenses, tendencies and whether this makes sense.


Cheers

 

[AltaRed]

Ditto to Electic12's comments. If Digitalatlas has a good paying HISA at the moment, e.g. 2.3% or so, I'd wait about 3 months to start the 2nd ladder, just to have staggered maturities. But all other things being equal, there is nothing wrong with a single ladder. As I mentioned previously, I don't worry about preciseness in staggering of my ladder, i.e. 10 holdings at precisely 6 month intervals. My maturities vary somewhat simply because I had too buying bonds and debentures which have their own maturity dates. I'd prefer they be closer to 6 month intervals but I am not losing sleep over it.

A year or two of cash, or cash equivalents, "outside" the portfolio, and a bond ETF seems to be plenty of liquidity.