Guaranteed Investment Certificates (GIC) provide a guaranteed form of income provided you lend your money for a set amount of time. There is a way to increase the flexibility of when you can withdraw and decrease the risk of investing at a low interest rate.

GIC laddering involves splitting up your investment into separate terms. If you have $5,000 to invest, you could purchase 5 separate $1,000 GICs, each maturing one year later. So in this example, you would purchase:

• A 1 year GIC for $1,000
• A 2 year GIC for $1,000
• A 3 year GIC for $1,000
• A 4 year GIC for $1,000
• A 5 year GIC for $1,000

Having your GICs laddered like this gives you $1,000 back each year, plus the interest it earned, as opposed to having the entire $5,000 locked in for the full 5 years. This provides you an annual opportunity to decide what you’d like to do with the money. You might choose to turn it over into another GIC if interest rates are good. In this case, you could continue the ladder by purchasing a 5 year GIC each following year, since you’ll always have GICs maturing every year for the next 4 years.

On the other hand, if interest rates are low that year, you might decide to invest your matured GIC in stocks or mutual funds if their prices look reasonable. This is the flexibility that GIC laddering provides.

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