Laddering

“Laddering” strategy
A “laddering” strategy is one way to diversify the long-term portion of your portfolio. Laddering allows you to hedge your investments against interest rate fluctuations – protecting them if rates go down, and allowing them to gain when rates go up.

In the past, this was accomplished by dividing the investment into five equal parts, purchasing 1, 2, 3, 4 and 5-year certificates. Each year, a portion of the investment would mature and be re-invested in a new 5-year certificate – which traditionally offers higher returns. But, for investors just starting out, this structure did not translate into higher returns until the investment reached its 5th year.

Example of Laddering
Now, with the new family of BMO RateOptimizer® GICs, investors earn a premium 5-year rate on their entire investment – right from the start! Investors also benefit from simplifying their GIC holdings into an all-in-one laddering solution – taking a proven strategy to a whole new level. Find out more about how the new family of BMO RateOptimizer® GICs work.