Segregated Fund

How to make the best of segregated funds

Segregated funds, also known as seg funds, are specific insurance products in which your funds are invested in underlying assets such as mutual funds for example. Segregated funds differ from mutual funds, however, in that they have a built-in guarantee for either all or part of your investment, potentially offering a more secure option. Generally speaking, you need to have held the investment for a minimum of ten years for this protection to apply and it often costs extra to benefit from this guarantee. You should also be aware that if you withdraw your funds before the maturity date, you will lose this protection and will only receive the current market value of your investment minus applicable charges.

The difference between retail and group retirement plan segregated funds

Often, workplace pensions constitute segregated funds but they work slightly differently to retail segregated funds that you purchase yourself. They usually do not come with the insurance guarantee, nor do they charge such high fees, though they do offer the potential for creditor protection and the possibility of excluding probate fees where applicable.

Here are some of the pros and cons of investing in segregated funds:

Advantages

  • As mentioned above, one of the main benefits is the fact that between 75% and 100% of your investment is protected,as long as you abide by the rules relating to withdrawalsi.e.: your funds must be held for a particular length of time.
  • In addition, many products offer you the opportunity to allow your beneficiaries to receive between 75% and 100% of the contributions that you have made in the event of your death. What’s more, as long as your beneficiaries are named in the contract, they will not pay probate fees.
  • Many funds also offer creditor protection which is useful for those who run their own business.

Disadvantages

  • You will often pay higher management fees for segregated funds compared with mutual funds, due to the added insurance and protection that they offer.
  • You are likely to be penalised if you withdraw your funds before the contract maturity date. Specifically, you will often pay a withdrawal fee and will also not benefit from the protection guarantee. To avoid this, you usually have to keep your monies invested for ten years.

Latest News

CLU Comment: Non deductible fines and penalties, Fees paid to a power of attorney, Managing inherent risk is a personal choice, Summer accidents highlight need for estate plans

Non deductible fines and penalties Fees paid to a power of attorney Managing inherent risk is a personal choice Summer accidents highlight need for estate plans

Financial Planning for Business Owners

Financial Planning for business owners is often two-sided: personal financial planning and planning for the business. Business owners have access to a lot of financial tools that employees don't have access to; this is a great advantage, however it can be overwhelming too. A financial plan can relieve this. A financial plan looks at where you are today and where you want to go. It determines your short, medium and long term financial goals and how you can reach them. For you, personally and for your business.

Investing as a Business Owner

Many business owners have built up earnings in their corporation and are looking for tax efficient ways to pull the earnings out to achieve their personal and business financial goals. We outline the factors to consider when investing as a corporation.

10 Essential Decisions for Business Owners

Business owners can be busy… they’re busy running a successful business, wearing lots of hats and making a ton of decisions. We've put together a list of 10 essential decisions for every business owner to consider.

Real Estate or Investments?

One of the age-old financial quandaries asked of financial advisors is “shall I invest in property or funds?”. Predictably, the answer is not at all straightforward and depends on many factors, including your own financial style, personality and circumstances. Let’s take a look at the pros and cons of each choice to help you to be better informed about which could be the most lucrative option for you

2019 Federal Budget

The 2019 budget is titled “Investing in the Middle Class. Here are the highlights from the 2019 Federal Budget.

Tax Lines to Look Out for 2018 Income Tax Year

An outline of the key lines to look out for in the 2018 Income Tax Year.

2019 Tax Calculator

Calculate your combined Provincial and Federal Tax in your Province

BC Budget 2019

BC Finance Minister Carole James delivered the province's 2019 budget update on February 19, 2019. The budget anticipates a surplus of $274 million for the current year, $287 million for 2020 and $585 million in 2021. The biggest announcements are: ● BC Child Opportunity Benefit ● Interest Free Student Loans