Skip to content

Staggered GICs: oppurtunity and safety

February 19, 2007

For those of you out in Canada it’s nearing the end of RRSP season and time to think about where to put your hard-earned money. If you’ve taken any courses in investing you know the #1 rule is to diversify your investment portfolio. Diversification should be done across sectors and investment products.

For a young single working guy like myself I went for an “aggressive” mutual fund and diversified with some GICs. Interest rates for GICs I’ve come across are around 3-4%. Now, suppose you (not the case for me) have $10,000 to buy GICs. How do you invest that 10K so can take advantage of rising interest rates and at the same time be safe from interest rates drops?

You can stagger your GICs by investing in 5 GICs for 2K each that mature at different terms. This way, each year you will have an extra $2000 that you can move around according to the market conditions and still be invested if rates don’t improve (for lenders that is).

This is just a simple technique that I learned while at school. Who says you don’t learn anything practical at school? 🙂

Advertisements

From → Uncategorized

Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: