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Is that enough liquidity it probably doesn't matter if maturity only comes around once a year?
There are a couple of advantages of liquidity in a GIC ladder that may not apply to you, so you have to make the call if it's important or not.

First advantage would be a quicker ability to re-invest cash thrown off your account that you want to go to fixed income. If you have to wait a year for a rung of a ladder to come due, what do you do with cash until that time. A six month ladder offers that cash a home quicker and the ability to enjoy the 5 year rates (which usually are greater than short term).
Second advantage is for those that need the cash during decumulation. Easier to get at your capital every 6 months rather than wait a year.
A third difference that may be an advantage or disadvantage is that if rates are rising you'll pick up the higher rates of the day twice as fast. But that can work against you in a dropping rate environment.

These advantages may or may not apply to you. The multi rung ladder was just a suggestion to your dilemma, but you have to work it into your situation.

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I think 2 ladders is reasonable, in terms of ease of management.
I keep a 10-way ladder in $CAN and ANOTHER 10-way ladder in $US. This results in 4 renewals per year. It's not too painful, but the Tangerine U/I (where I get the best US$ rates) is really awful for getting a clear summary of the state of a 10-way ladder.
 

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I keep a 10-way ladder in $CAN and ANOTHER 10-way ladder in $US. This results in 4 renewals per year. It's not too painful, but the Tangerine U/I (where I get the best US$ rates) is really awful for getting a clear summary of the state of a 10-way ladder.
Yeah, ladders are a definite spreadsheet application.

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Not in my case for 9-10 entries. That is 2 a year...noted in my calendar.
I have 25 entries in my stable, and my spreadsheet, on sheet 1, shows a list of each GIC or Bond (matters not), along with its face value, maturity date, YTM, coupon, price paid, capital gain/loss, accrued interest, cost base, purchase date. Necessary items for tax reporting unless I want to rely on my memory! haha

This sheet1 extends out horizontally for as many years as the ladder or bond maturities demand.

Then on subsequent sheets 2 - 7 (or more if greater than 5 year maturities), it lists each bond or GIC vertically, and then horizontally shows its associated coupons from Jan to Dec with highlights when it's a final coupon.

This allows me to get a birds eye view of the various ladders and their maturities and coupons. How else could an old fool with decreasing mental capacity such as myself keep track for CRA?

What you describe sounds like you're just winging it. You're much more capable than myself. I require computers and records and spreadsheets to keep track.

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What you describe sounds like you're just winging it. You're much more capable than myself. I require computers and records and spreadsheets to keep track.

ltr
To some extent I wing it but I use Quicken for record keeping and thus the essentials are covered.

I think it is more a case of me not taking any of this too seriously having 13 years of retirement behind me. It's a balance of not being too stupid about it while at the same time it not being a boat anchor either. If I miss a maturity date by a month for some reason, it might annoy me for a moment, but it isn't going to make an iota of difference to my life. Life is too short for such things.
 

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Yeah, ladders are a definite spreadsheet application.
Yes. I have a line item per GIC and sort by maturity date. Once in a while I will sync up the "current value" info so I can transfer the total value to my other spreadsheets for allocation calcs. For taxes I used the tax docs. This also gives a figure to add to my US$ ACB spreadsheet at tax time.
 

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Putting my money where my mouth is, I just bought a 5 year Scotia GIC through iTrade at 2.25%

The main consideration was the need for the GIC in my ladder. But I also monitor bond yields and XBB to help tell me what a "good" GIC rate is. Currently, XBB yield to maturity is 2.10% so I believe the GIC is a reasonable purchase at 2.25%.

I did not think so a couple weeks ago:

GIC rates starting to tick higher. I monitor the best rates for major (AA rated) banks at Scotia iTrade. At the end of August it was just 2.02%. Today it's up to 2.18%.

According to historical yield difference between GICs and bonds that I track, I think current GIC rates are a bad deal.
 

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Putting my money where my mouth is, I just bought a 5 year Scotia GIC through iTrade at 2.25%

The main consideration was the need for the GIC in my ladder. But I also monitor bond yields and XBB to help tell me what a "good" GIC rate is. Currently, XBB yield to maturity is 2.10% so I believe the GIC is a reasonable purchase at 2.25%.
Yeah, I do the same thing James, but I mostly evaluate using comparisons that I feel are equivalent credit risks.

Sure, I look at XBB just like you do, but my main consideration is the standard 5 year Government of Canada bond which is usually a June 1st maturity.
So today, this bond is a 4.7 year CDA comparison to the 5 year CDIC GIC. You have to do some extrapolation between 4.7 and 5.0.

Then I pick the closest provincial 5 year bond, and right now that would be a Quebec government 4.9 year bond.
Quebec bonds always pay a bit more, so I take that into consideration.

You can see your 5 year CDIC GIC pays 2.25%, while (see attached quote from TDDI on $20,000 BUYS) the CDA 4.7 year yield is 1.20% and the Quebec provincial 4.9 year yield is 1.62%.

You can do the math on the difference to 5.0 years, but you can see how much you're being compensated for the loss of liquidity with a GIC considering similar credit risk (basically the borrower's ability to repay the loan). It's a pretty close risk comparison (CDIC vs AAA vs Ah).

Anecdotally, GIC's appear to pay better today than in the past. I use to exclusively use bond ladders until I found GIC's started to pay better yields for what I supposed was their loss of liquidity (given equivalent credit risk). The only beef I have today with GIC's is the rather low CDIC limit of $100K.

CDA
CDA BOND.png


QUE
QUE BOND.png

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Thanks ltr. I also look at the government bond rates, and I agree that this is a better comparison on equivalent risk.

I haven't seen those Proposed Fixed Income Ladder windows at TDDI before. What does that do? Is that showing the yield-to-maturity of one bond, or multiple bonds?
 

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Thanks ltr. I also look at the government bond rates, and I agree that this is a better comparison on equivalent risk.

I haven't seen those Proposed Fixed Income Ladder windows at TDDI before. What does that do? Is that showing the yield-to-maturity of one bond, or multiple bonds?
That's the ladder feature where you can select a number of bonds to create a ladder (or just one) and get a report with graphs etc.

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Discussion Starter #52
How does everyone feel about provincial CU GICs? I had mentioned that I buy through BMO Investorline for simplicity, but I actually have a membership with Meridian CU in Ontario because I have a Meridian VISA card, and they make you become a member and open some accounts.

Anyway, their GICs offer a little more than the offerings through BMO, especially the 3 and 5 year, and there's some kind of bonus with a 5 year ladder (though I imagine you need to do something to set this up with them, I can't just add/piece together my own ladder. Now, I have many years left on my ladder through BMO, but if I slowly start to migrate everything over to Meridian, I may end up with a better return over time (assuming they continue to tend to offer more than what I get through BMO). BMO is just a platform, so technically I'm issued GICs through several banks, including but not limited to BMO. At Meridian, they would all be at one CU, and I guess less diversified. They manage 23 billion in assets and there's provincial insurance coverage up to 250k in deposits...

I seems like you all are fine with GICs that are not actually issued by the big banks. What're your thoughts about this setup? The point wouldn't be to move lots of money around all the time to chase rates at different places, but a one direction move to Meridian over time.
 

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How does everyone feel about provincial CU GICs? I had mentioned that I buy through BMO Investorline for simplicity, but I actually have a membership with Meridian CU in Ontario because I have a Meridian VISA card, and they make you become a member and open some accounts.

Anyway, their GICs offer a little more than the offerings through BMO, especially the 3 and 5 year, and there's some kind of bonus with a 5 year ladder (though I imagine you need to do something to set this up with them, I can't just add/piece together my own ladder. Now, I have many years left on my ladder through BMO, but if I slowly start to migrate everything over to Meridian, I may end up with a better return over time (assuming they continue to tend to offer more than what I get through BMO). BMO is just a platform, so technically I'm issued GICs through several banks, including but not limited to BMO. At Meridian, they would all be at one CU, and I guess less diversified. They manage 23 billion in assets and there's provincial insurance coverage up to 250k in deposits...

I seems like you all are fine with GICs that are not actually issued by the big banks. What're your thoughts about this setup? The point wouldn't be to move lots of money around all the time to chase rates at different places, but a one direction move to Meridian over time.

i wish i could offer you profound insight into Meridian & into provincial credit unions in general but alas i cannot

all i can say is that if it were myself, i might consider gradually transferring something between an nth to less than half of my holdings to any provincial credit union. I'd feel slightly creeped out by the fact that all holdings would have to be Meridian's own paper, whereas formerly at BMO i had been holding different issues, each with CDIC insurance, each from different issuers, ie a different order of safety.

all in all, i rather think i wouldn't do it. Tis a poor thing, but 'tis me own opinion.
 

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How does everyone feel about provincial CU GICs? I had mentioned that I buy through BMO Investorline for simplicity, but I actually have a membership with Meridian CU in Ontario because I have a Meridian VISA card, and they make you become a member and open some accounts.
Have you checked out the threads here https://www.highinterestsavings.ca/ to see what people think of Meridian? There may be some valuable insight in terms of customer service, etc. Personally, I've never had an account at a CU and have no interest when there are so many other choices such as Oaken Financial and EQ Bank which are CDIC insured. That said, I have only ever bought via brokerages for simplicity myself.
 

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At Meridian, they would all be at one CU, and I guess less diversified.
There's your answer. You are increasing your risk for a small increase in yield. Fixed income should be as low risk as possible. Putting all your eggs in one basket isn't usually a good idea.

Credit unions aren't CDIC insured and you're probably limiting your maximum of total insurance to $250K (since all your GIC's will be at one place). In a brokerage, each company's GIC has a $100K upper CDIC limit, so 10 GIC's would be a million.

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Meridian is probably okay for some of DA's business on the assumption Meridian has spread its risk some in its lending and Ford won't let Ontario's CU insurance backing collapse in a major financial crisis, e.g. golden horseshoe housing, when a number of CUs could go under at the same time. I'd be willing to put $100k there perhaps if I already had an account there. After all, I trust CDIC insured EQ Bank with upwards of $100k of my money when Equitable Group is an alternative lender. I simply suggest DA look at the threads about Meridian, e.g. https://www.highinterestsavings.ca/profile/meridian-credit-union/ to see if DA wants to do GIC business with them.
 

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I filled in my ladder a bit (found a hole), bought a 4 year BMO at 1.86% at my discount brokerage. This should patch up my ladder nicely.

Also seriously thinking of buying a 5 year BMO at 2.06% since I think the rate is good, but it doesn't exactly fit my ladder.

My ladder has a mix of different issuers, but these are my first BMO purchases. It's the first time I've seen very competitive rates from them versus Scotia & Manulife.
 

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It's still possible to grab GICs at around 2% yield.

Imagine what happens if inflation goes to -1%. Your 2% GIC now has a 3% real yield, with no risk... pretty amazing.
 

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fryman, I think those, and many other GICs near 2% are a great buy right now. I would like to buy more but am already overweight on my fixed income allocation so I'll have to wait for a GIC to mature first.
 
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