It’s that time of year again… do I invest in an RRSP? If so – what type of funds should I invest in.
Well if you are over 55 – according to a RBC survey , 87% of Canadians are looking for investments that grow & guarantee principal and yet 60% not familiar with Segregated Funds that are available from insurance companies.
Segregated funds offer the growth potential of a mutual fund with the comfort of an insurance contract to guarantee the principal at maturity or death, and yet only 17% of respondents in the survey were exploring Segregated Funds as part of their retirement plans.
If you are reviewing your financial plans and looking at making investment decisions ahead of the RRSP deadline, I want to help make you aware of this solution to help you plan for your future.
Segregated Funds combine the growth potential of mutual funds with the comfort of an insurance contract securing principal guarantees at maturity and at death, allowing investors to save for the future with peace of mind. Segregated Funds can play an important role if you are looking to grow and protect your money while ensuring your assets are smoothly transferred to beneficiaries.
Estate Planning Benefits and Seg Fund Costs
I find most (about 80%) of Canadians are in the dark when it comes to the fundamentals of Segregated Funds, contributing to missed opportunities for broader investment portfolios. For example, 83 % of the respondents indicated that Estate Planning was important to them, yet 72 % didn’t know that Segregated Funds have unique estate planning benefits such as the ability to bypass the probate process ensuring beneficiaries get their payout faster, privately and with less cost.
Cost may also be a barrier to the overall lack of awareness of Segregated Funds and why Canadians aren’t considering them in their financial plans. While 33 % agreed that they wouldn’t mind paying a higher fee for the added protection that Seg Funds guarantee, 47 % disagree and 20 % were unsure. When purchasing a Seg Fund, you are buying an investment with guarantees to protect your money from market downturns. Their is a death benefit of up to 100 % so that your assets are preserved for your loved ones, in addition to bypassing the probate process. Depending on your risk and investment goals, for many these benefits outweigh the additional cost of a Seg Fund.
Did you know: (results from RBC survey)
- You can invest in a Seg Fund for as little as $50 per month. True. Most Canadians (72%) weren’t aware that investing in Seg Funds doesn’t require a large monthly financial outlay.
- You have to be 65 to invest in Seg Funds. False. However only 39% of Canadians know they don’t have to meet this age requirement.
- With Seg Funds, my money is locked in. Also false. 67% of Canadians didn’t know you can access your investment at any time minus any fees.
- You can have Seg Funds in both registered (i.e. TFSA, RRSP) and non-registered account. True. And yet, 59% of Canadians were not aware of the flexibility Seg Funds offer.
- I need a life licenced advisor to buy a Seg Fund. Only 16% of Canadians know this is true. (Because of the death benefit guarantees)
For more information on Segregated funds / RRSP and TFSA’s – Click Here
Is a Segregated Fund right for you? I don’t know….call me and lets talk about your situation, I’ll give you the honest truth! Click here to contact me