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

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.

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

Comparing TFSA's and RRSP's - 2019

If you are seeking ways to save in the most tax-efficient manner available, TFSAs and RRSPs can both be effective options for you to achieve your savings goals more quickly. However, each plan does have distinct differences and advantages / disadvantages. Let’s take a look at their key features

When and Why You Should Conduct an Insurance Audit

As our lives grow and change with variable circumstances, new additions, and job transitions, our needs for insurance will also evolve. Additionally, economic fluctuations and external circumstances that influence your insurance policy will need frequent re-evaluation to ensure that you are making the most appropriate and financially favorable decisions. Talk to us we can help.

2019 Financial Calendar

Financial Calendar for 2019- All the deadlines you need to know to maximize your benefits!

Why You Should Consider Critical Illness Insurance

There are no perfect answers in the area of your personal finances, but if you are looking for an option that has the potential to offer you a real sense of peace of mind to secure the financial future of you and your family, critical illness insurance is certainly an interesting avenue to explore.