reinvesting GICs

Question

Hi,&#xD;&#xA;I have laddered all my GIC investments to have one maturing  every year. I&#x27;m not sure what these are called in the US...they are guaranteed investment certificates (term deposits) here in Canada.  I have bought 5 year GIC&#x27;s upon each one&#x27;s maturation date to get the highest interest rate. I have one coming due this January.  The current best 5 year rate I can get in Canada  is 3.3%.  Should I abandon my 5 year reinvestment stategy with this GIC given predictions that rates will likely increase after the summer of 2010.....and if so, how long should I reinvest this GIC for? One year rates are currently 1.4 %  Two year rates are 2.05 %   Three year rates are 2.55 % and four your rates are 2.92 %&#xD;&#xA;Thanks !!!!

Sabretooth · Answer

Hi,&#xD;&#xA;I have laddered all my GIC investments to have one maturing  every year. I&#x27;m not sure what these are called in the US...they are guaranteed investment certificates (term deposits) here in Canada.  I have bought 5 year GIC&#x27;s upon each one&#x27;s maturation date to get the highest interest rate. I have one coming due this January.  The current best 5 year rate I can get in Canada  is 3.3%.  Should I abandon my 5 year reinvestment stategy with this GIC given predictions that rates will likely increase after the summer of 2010.....and if so, how long should I reinvest this GIC for? One year rates are currently 1.4 %  Two year rates are 2.05 %   Three year rates are 2.55 % and four your rates are 2.92 %&#xD;&#xA;Thanks !!!!

wallstreetcappers · Answer

I dont see benefit of investing in CDs (GIC to you) given the shoddy rates and surrender fees.

I would rather sit it out and try to find a savings or market fund to scrap it with and not be hooked for three years for such awful rates.

Sabretooth · Answer

Thanks Wallstreetcappers...I need to look at other options like the ones you suggested....although my risk tolerance is very low.

reinvesting GICs

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