Segregated Funds
November 1, 2008 by admin
A segregated fund can be a great way to invest for the long term.
segregated fund is simply an investment structure much like a mutual fund but it is offered through an insurance company. Because an insurance company is offering it, there are a number of benefits that mutual funds don’t have.
Segregated funds vary quite a bit, but the following is true for all segregated funds:
1. Creditor protection. (on a case by case basis) If you can establish that you didn’t invest your assets in a segregated fund to avoid your creditors, it is protected.
2. Did you know that when you die, your Will becomes public record? This is one of the reasons why you see wills contested. One of the features of a segregated fund is the ability to name a beneficiary. This is helpful in a few ways. First – you bypass your estate which allows you to eliminate probate fees. Second – privacy. Your beneficiary receives the funds
directly when it bypasses your estate. No one can contest it or look it up at the courthouse.
3. 75% – 100% of your principle is guaranteed if you leave it for 10 years. This means you are guarantying your principle if times stay bad and still taking advantage of the markets if times are good.
4. All this and if the market does well, you get to participate in the growth while reducing your risk because of the guarantees.
This next point is only true of a few segregated funds in the market:
5. Some segregated funds offer an additional guarantee of 5% per year growth or income on the amount invested if you leave it for 10 years. So if the market doesn’t perform, you still grow your money..
Makes you wonder why everyone that has investments doesn’t have a segregated fund.
Make sure you don’t tackle this alone. Get professional help from someone that knows how to put this together for you.