(NC)-If you are an investor who wants the security of knowing your principal is protected, while also having the flexibility of accessing some of the money you've invested, there's an investment strategy you should know about.
In addition to offering a very secure way to safeguard your principal, Guaranteed Income Certificates (GICs) can be "laddered", so that not all your money is locked in for the same length of time.
Simply stated, laddering involves staggering the maturity dates of your GICs. You begin by dividing the money you want to invest into equal portions. Each portion is then invested into a GIC with a different term, typically with maturity dates ranging from one to five years. One of your GICs matures every year, at which point you can access those funds or you can choose to reinvest in a new five-year GIC and continue your laddering strategy.
"Laddering is also a great way to maximize your returns," adds Rosalyn Kent, head of GICs and Savings at RBC. "If interest rates rise, you can reinvest the money from the GIC that has matured at those higher rates. If rates fall, a large portion of your GIC portfolio still benefits from the original higher rates that applied when you made your initial GIC investment."
There are a number of online resources that can show you how laddering can work for you. To get you started, check out www.rbcroyalbank.com/products/gic/gic-ladder.html.