New to Investing Series Part IV: Segregated Funds

You have likely heard of mutual funds. These are pooled investments sold by banks and brokers that allow you to have a diverse portfolio of stocks, bonds and other investments in a single fund. 

Segregated funds are similar except they are sold by life insurance companies and have maturity guarantees and death benefits.

Segregated funds combine investment growth potential with insurance protection. Similar to mutual funds, they consist of a collection of underlying funds managed by professionals. 

Advantages of Segregated Funds over Mutual Funds:

1. Principal Investment Guarantee: Typically, you receive a guarantee of 75% to 100% of your principal investment. This means most (if not all) of your contributions remain with you or your estate.

2. Death Benefit: If you pass away before the contract matures, the money in your segregated funds is passed on to your beneficiary potentially tax-free, without dealing with probate fees.

3. Option to Lock in Gains: You can lock in gains periodically through reset options, safeguarding your investment.

4. Creditor Protection: Segregated funds offer protection against creditors.

Disadvantages of Segregated Funds:

1. MER Fees: Segregated funds typically have slightly higher MER’s. This is needed to cover the cost of insuring your investment.

It is important to work with someone who keeps an eye on the market and the trends of funds to maximize your investment returns. Talk to the Tara Webber at BeOne Financial today about how we can help you make the most of your investments.