What is the key advantage of a laddered GIC?

A laddered Guaranteed Investment Certificate (GIC) strategy offers significant flexibility in cash flow, which is its key advantage. By staggering the maturity dates of multiple GICs, investors can have regular access to their capital at different intervals. This structure allows them to benefit from potentially higher interest rates on longer-term GICs while maintaining liquidity as shorter-term GICs mature.

Investors can use the funds that become available from maturing GICs for various purposes, such as reinvesting, covering unexpected expenses, or funding planned expenditures. This flexibility is particularly beneficial in a fluctuating interest rate environment, as it allows investors to take advantage of new rates as they change over time.

While higher interest rates can be attractive, GICs are generally known for their fixed rates, and individuals might not achieve the same level of yield looking for flexibility alone. Moreover, the longer investment horizon is a characteristic of certain GICs, but it does not specifically capture the essence of the laddering strategy's main advantage, which is managing liquidity effectively.