FAQ: How Do I Model a GIC Ladder?

We typically recommend you think about GICs as part of your fixed-income allocation, GICs just being one type of fixed-income investment.

So we wouldn’t necessarily recommend setting up a separate GIC ladder on top of your existing asset allocation (as this would then skew the overall asset allocation more conservative) but instead consider the GIC ladder simply as part of the fixed income allocation.

There is no way to dynamically create a GIC ladder in the platform at the moment, but you can manually model it in one of two ways:

Modelling a Non-Registered GIC Ladder:

If you are holding your GIC ladder in non-registered accounts you could use the “Savings” account for this purpose. Remember that the GIC ladder gets replenish each year, so in practical terms the GIC ladder in the Savings account will not change in size. For example, if the “gap” was $20,000 each year, the Savings account balance would remain at $60,000 (growing with interest). There is no need to model the contributions and withdrawals to the GIC ladder year by year because they simply cancel out.

You could then adjust the amount in the GIC ladder as the sources of income change, but again, this would need to be planned manually using the “Savings” account and overrides in Planning > Projections > Table.

Modelling a Registered GIC Ladder:

If you’re setting up a “cash wedge” or GIC ladder in an RRSP then you can do that by adjusting the asset allocation on a year by year basis in Planning > Projection > Table.

If you open the RRSP account using the “>” arrow you can then open the Net Return column using the “>” arrow. You can see an example in this article.

Then you could adjust the fixed-income allocation or cash allocation to reflect the increasing % of the portfolio being allocated to the GIC ladder.

For example, if you have a $1,000,000 RRSP and you’re aiming for a $100,000 GIC ladder over 5-years you could increase the cash allocation by 2% per year for 5 years and then draw it down the same way by decreasing the cash allocation by 2% per year over 5 years. So 2%, 4%, 6%, 8%, 10%, then draw down 8%, 6%, 4,%, 2%, 0%.