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At Financial Essentials Inc., we specialize in utilizing investment solutions known as portfolios within our segregated fund offerings. These portfolios are typically composed of around ten carefully selected funds, each working together to help achieve a projected rate of return that aligns with your financial goals.
Let us help you discover how segregated funds can provide both investment growth and valuable protection.
A segregated fund is an investment that comes with a level of protection, making it an exceptional insurance vehicle. With segregated funds, investors can benefit from a 75% or even a 100% principal guarantee at maturity, which helps secure the original investment against market volatility. Additionally, segregated funds offer a death benefit guarantee, which ensures that beneficiaries receive a pre-determined percentage of the initial investment or the investment’s market value—whichever is higher.
Avoids the probate process, allowing assets to go directly to beneficiaries privately and in a time efficient manner
Assets are potentially safeguarded from creditors, depending on individual circumstances
Beneficiary information and distributions are kept private, unlike traditional investments
Your principal investment is protected. Depending on the contract either 75% or 100% of your principal investment is guaranteed
Depending on the contract, your beneficiaries will receive 75% to 100% of your contributions tax free upon passing away
Offers a guarantee that protects your original investment, even during market downturns, providing security for your savings
All investment earnings within a TFSA are tax-free, allowing for greater accumulation of wealth over time
Assets within a segregated fund may be protected from creditors, which is beneficial for individuals concerned about potential claims
Allows for direct beneficiary designations, which can bypass the probate process, ensuring a faster and private transfer of assets
Investors can access their funds without tax penalties, providing flexibility to adjust their financial strategies as needed
Segregated Funds
Did You Know? Did you know that the life insurance industry, and specifically Segregated Funds, have been around longer than mutual funds! Segregated funds were first offered in Canada in 1961, while mutual funds made their debut in 1969.
A segregated fund is an investment that comes with a level of protection, making it an exceptional insurance vehicle. With segregated funds, investors can benefit from a 75% or even a 100% principal guarantee at maturity, which helps secure the original investment against market volatility. Additionally, segregated funds offer a death benefit guarantee, which ensures that beneficiaries receive a pre-determined percentage of the initial investment or the investment’s market value—whichever is higher.
As an insurance product, segregated funds provide unique advantages, such as:
It’s important to note that, unlike mutual funds, segregated funds come with an additional management or administrative fee. While the fees for segregated funds may be around 0.5% – 1.5% higher than those of mutual funds, this cost is directly tied to the protection and guarantees they offer. As mentioned above, a segregated fund is an insurance product, meaning that between 75% and up to 100% of your principal is safeguarded—even if the markets take a significant downturn. In contrast, a mutual fund, while potentially lower in fees, does not offer this same level of security leaving your initial investment exposed to market risk. This added layer of protection with segregated funds can provide invaluable peace of mind, especially in volatile market conditions.
At Financial Essentials Inc., we specialize in utilizing investment solutions known as portfolios within our segregated fund offerings. These portfolios are typically composed of around ten carefully selected funds, each working together to help achieve a projected rate of return that aligns with your financial goals.
Let us help you discover how segregated funds can provide both investment growth and valuable protection. Contact us!
Tax-Free Savings Account – TFSA
Tax-free savings accounts (TFSAs) are designed to help Canadians save more. In addition to cash, you can have GICs, bonds, stocks, mutual funds, ETFs and many other products in your TFSA. The annual TFSA dollar limit in 2019 is $6,000. Also, you can carry forward any unused contribution room. Funds withdrawn from your TFSA are tax-free. This can include your original contribution amount as well as interest, dividends and capital gains generated from the investments.
TFSA contributions are made with after-tax dollars but RRSP contributions are made with pre-tax dollars. You’ll need to consider your financial circumstance, including your income tax rate today and what you think your tax rate could be in the future, when you need the funds.
Registered Retirement Savings Plan – RRSP
A Registered Retirement Savings Plan (RRSP) is an account, registered with the federal government, that you use to save for retirement.
Tax-deductible contributions: You get immediate tax relief by deducting your RRSP contributions from your income each year. Effectively, your contributions are made with pre-tax dollars
Tax-sheltered earnings: The money you make in your RRSP investments are not taxed as long as it’s in the plan
Tax deferral: You’ll pay tax on your RRSP savings once you withdraw money from your plan
