How To Build a GIC Ladder Into Your Portfolio

How To Build a GIC Ladder Into Your Portfolio

With interest rates higher, GICs have become more attractive as an investment option and a 5-year GIC ladder can be a great addition to your portfolio. GICs can be considered part of your fixed-income allocation and in some cases GICs can even outperform bonds of equal length.

If you’re adding GICs to your investment portfolio then you’ll want to consider building a GIC ladder. A GIC ladder is a common way to invest in GICs.

When investing in GICs, a GIC ladder can help take advantage of the benefits of GICs while reducing the downsides.

GICs are typically locked in for a specific term. This could be shorter-term like 90-days or longer-term like 1-year, 2-years, 3-years, 4-years, 5-years etc.

Laddering GICs will help take advantage of longer-term GIC rates while also improving liquidity with some shorter-term GICs.

When a GIC ladder is working well, there will always be at least one GIC maturing every year which can then be used to purchase a new longer-term GIC. Here’s why you may want to set up a GIC ladder and how to do it…

Should You Add GICs To Your Investment Portfolio?

Should You Add GICs To Your Investment Portfolio?

For 10+ years interest rates were at historic lows and investing with GICs was less attractive. But now interest rates are higher and adding GICs to your investment portfolio has become much more attractive.

If you don’t have GICs in your investment portfolio, then you may want to consider including some within your fixed-income asset allocation.

GICs (Guaranteed Investment Certificates) are a type of fixed-income investment. They’re extremely safe and in most cases are fully insured by the CDIC (Canadian Deposit Insurance Corporation) up to $100,000 per financial institution.

GICs are guaranteed. They’re like a savings account but with a higher interest rate. GICs are often locked in for a specific term. Terms can be as short as 30-days and as long as 10-years. But most GICs have terms of 1-year, 2-years, 3-years, 4-years, and 5-years.

Adding GICs to your investment portfolio can be very easy. It’s possible to buy GICs from many financial institutions directly OR to buy GICs through your brokerage account.

With interest rates higher, investing with GICs has become more attractive, and in some cases, GICs can even perform better than bonds!

What Is An ETF? And How Do They Work?

What Is An ETF? And How Do They Work?

ETFs have taken over the world of investing. Everyone is getting behind ETF investing, from DIY investors to Warren Buffet, from robo-advisors to huge institutional investors. But what is an ETF? What does ETF stand for? And how do they work?

ETF stands for Exchange Traded Fund… what that means is that it’s a collection of investments, stocks, bonds etc, and those investments are grouped together into one fund that you can purchase and sell on the stock exchange.

This is slightly different than mutual funds. Mutual funds also hold a collection of investments but you purchase them through the fund provider and at a set price at the end of the day based on how much the fund is worth.

The difference is subtle but it matters, and I’ll explain why.

ETFs have grown in popularity over the last 10-years. One of those reasons has to do with low-cost index investing. Index investing is when a fund (could be an exchange traded fund, or it could be a mutual fund) tries to replicate the returns of a particular index. And an index could be anything.

For example there is an S&P 500 ETF that aims to replicate the returns of the S&P 500, a collection of the 500 largest companies in the US. An index could also be a bond index, in this case a bond ETF aims to replicate the return of a certain type of bond, maybe corporate bonds, maybe government bonds, maybe high-risk/junk bonds etc.

The amazing thing about ETFs, especially index ETFs is how little they cost, how highly diversified they are, and how simple they makes investing for the average person.

But how do ETFs work?

It’s a great question.

The 4 Most Important Keystone Habits In Personal Finance

The 4 Most Important Keystone Habits In Personal Finance

There are certain habits that make things way easier, these habits are more important than others, these habits are called keystone habits. Keystone habits create a foundation from which you can make even bigger and more positive changes. Mastering the right keystone habit can transform your life.

We have habits everywhere in our lives and we build new habits all the time (both good and bad!). We use these habits to support our daily lives. These habits make our lives easier, you don’t have to think about what you’re doing, it just comes naturally.

Having a solid keystone habit will create a foundation from which you can make even bigger changes. Eating right, getting regular exercise, sleeping eight hours per night, these are all keystone habits that create a solid foundation from which you can make even more positive changes in your life.

The best part about keystone habits is that once they’re established they don’t take much effort to maintain.

When it comes to personal finance there are 4 important keystone habits. Once these habits are established they create a ripple effect through the rest of your personal finances.

If you practice these four keystone habits then there is nothing you can’t achieve with your personal finances!

Keep Things Simple: Create A Routine For Your Finances

Keep Things Simple: Create A Routine For Your Finances

Routines add structure and discipline to our lives. They make things easier. When we’re in a good routine things seem faster, easier and more efficient. We know exactly what to expect and how to do it.

Creating a routine for your finances is a great way to add structure and discipline to your financial life. It makes you more efficient and happy with your finances (and who doesn’t want that?).

Anyone who has spent too much time managing their finances knows how quickly you can feel burnt out. This is called budget fatigue and it’s a very real problem. It’s when you spend so much time and effort managing your money that you end up making worse spending decisions because you’re just so tired.

Having a routine helps you manage your finances more efficiently. It’s one of the easiest ways to improve your finances for the long term. Your routine can include things like budgeting, investing, saving etc.

For years and years, we’ve been on a 4-month personal finance routine. We review our finances only three times per year. How’s that for efficient!

We review our finances once in mid-January, once in mid-May and then once in mid-September.

During these reviews, we sit down and look at our spending, our budget, our investments, our contributions and we see if we need to rebalance or not. We also talk about the next 4-12 months, what special expenses we can expect, and if we should make changes to our regular budget.

During these financial “check-ins” we also review our long-term financial goals. We check to see if we’re on track or if we need to make changes to either our expectations or our savings rate.

Having this routine has improved our personal finances immensely and I recommend everyone create a routine for their finances so you can experience these benefits too.

There are four main ways our personal finance routine has helped improve our finances…

Does The 4% Rule Make A Good Retirement Plan?

Does The 4% Rule Make A Good Retirement Plan?

Does the 4% rule make a good retirement plan? Before we answer that question let’s first explore what the 4% rule is and some of its pros and cons.

The 4% rule is a great personal finance rule of thumb.

Like many rules of thumb, it provides good direction for financial goals, it’s simple, it’s easy to understand, and it’s relatively accurate.

Unlike other personal finance rules of thumb, the 4% rule is also backed up by quite a bit of academic research, so if there was any personal finance rule of thumb to use, it would certainly be the 4% rule.

Let’s review what the 4% rule is in more detail, the pros and cons, and why you may or may not want to use the 4% rule for your retirement plan.

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