As an expert, you are probably aware that simply having money in a bank account without generating returns means that every day it loses value over time due to inflation. So, what types of instruments should you consider investing in?
Apart from the guaranteed investment certificates (GIC), where the performance, as its name says, is guaranteed; There are two types of funds, which although their returns are variable, give us the possibility of obtaining much more attractive returns. We talk about mutual funds and segregated funds.
In Canada, a segregated fund is a type of investment fund that is offered through life insurance companies, and that provides certain asset protection features not found in traditional mutual funds.
Another feature is that there is a guarantee in the event of death or at the maturity of the product, which provides an additional level of protection and guarantee for the invested capital. Additionally, segregated funds also offer the ability to name specific beneficiaries, allowing investors to transfer their assets directly to their heirs without going through the probate process.
Unlike mutual funds, segregated funds are insurance policies that work as an investment. Policyholders invest in funds that are held in a separate account with the insurance company and are designed to provide limited protection against creditors in the event of bankruptcy or liquidation. Due to this protective feature, segregated funds are often used for estate planning purposes.
In short, segregated funds are one of the best investment options that exist today in Canada, as it is the way to obtain attractive returns, with an unbeatable level of protection.
Open your TFSA (Tax Free Savings Account) or your RRSP (Registered Retirement Savings Plan) and start saving for your family's future today.