How to build a Bond or GIC Ladder is a simple three step process.
- Decide the amount of money to put into a Bond or GIC for the longterm $50,000, $100,000, $200,000 etc.
- As longterm interest rates are on the upward trend decide on what increments to invest in, 3rds, 4ths, 5ths.
Example: Intial Investment $50,000 (Split over 5 years equally)
Year 1 – $10,000
Year 2 – $10,000
Year 3 – $10,000
Year 4 – $10,000
Year 5 – $10,000
At Year 6 reinvest Year 1 into a new Bond or GIC, and keep repeating as each Bond or GIC needs to be renewed.
- The benefits paying taxes on only one-fifth of the interest earned on the Bond or GIC and protecting oneself as interest rates rise (positive) or as interest rates decrease (negative).
Author – Sam Latella – copyright 2019