Investments
1. Segregated Fund
A Segregated Fund is a type of investment fund administered by Canadian insurance companies in the form of individual, variable life insurance contracts offering certain guarantees to the policy holder such as reimbursement of capital upon death. As required by law, these funds are fully segregated from the company’s general investment funds. A segregated fund is an investment fund that combines the growth potential of a mutual fund with the security of a life insurance policy. Segregated funds are often referred to as “mutual funds with an insurance policy wrapper”.
Who should consider Segregated Funds?
Business owners and professionals who wish to have guaranteed contribution and save their beneficiaries from seizure by creditors, bankruptcy and lawsuit after their death can especially benefit from Segregated Funds. Given the nature of their guaranteed payouts at death or maturity, they merit serious consideration by investors nearing retirement or seeking to secure their investments.
Benefits of Segregated Funds:
Guarantee at maturity: Money invested in a segregated fund has a guaranteed payout of 75% upon maturity.
Guarantee upon death: At your death, the amounts invested in your segregated fund contract are guaranteed at 100%.*
Potentially creditor protected: Designation of one or more beneficiaries within the class of beneficiaries as prescribed by the applicable insurance legislation potentially protects your funds from seizure by creditors.
One can reset the maturity and death benefits up to 4 times in some of the companies in some maturity guarantee options.
Simplified estate settlement: Upon your death, all funds payable are distributed directly to your designated beneficiaries and do not become part of your estate, avoiding estate fees.
Beneficiary designation for non-registered contracts: Estate planning and inter-generational wealth transfer can be facilitated through direct beneficiary designations.
2. TFSA
TFSA or Tax-free Savings Account is a popular savings investment in Canada that allows you to save without being taxed on the growth of your investment when you withdraw your funds. You can use this investment for your retirement, holiday expenses, new car, health related emergencies or home renovations.
Why TFSA?
TFSA is a highly recommended because of several benefits:
Flexible withdrawals
Tax-free investment
No income required
No limit to lifetime contribution
No credit or impact on Federal Benefits
Eligible for life
Indefinite carry-forwards
Perfect choice for quick investment growth
Who should consider
Those who have maxed their RRSP investment and looking to for an option to grow money without paying tax.
Those who wants to invest in RRSP later but in the mean time wants to let the money grow without paying taxes.
Low income or self-employed who doesn’t have room for RRSP contribution.
Anyone who have SIN # and is above 18 yrs old.
3. RRSP
RRSP or Retirement Savings Plan is a tax-sheltered, tax-deferred, personal investment plan registered with the Canadian Federal government to help you secure your future after you retire. The contributions made in the RRSP reduces your tax payable and at many times it helps you to refunds from the tax deducted..
Why RRSP insurance?
RRSP is one the investment tools provided by Canadian Government to help increase retire savings of individuals by reducing there income to the amount of savings they are making in their RRSP account. The individuals get an immediate tax savings and the saving also grows without paying tax as long as the money is in RRSP account.
How it works?
How much an andividual can invest is based on his previous year income and unused room of the past years. Beat place to find exact amount can be invested, is the individual’s Tax return.
Investment Options
Savings deposits
Treasury bills
Guaranteed investment certificates (GICs)
Equities
Mutual funds
Segregated Funds
Bonds
4. RESP
Registered Education Savings Plan (RESP) helps you save for your children’s post-secondary education. It has tax-free growth, offers flexibility and helps you plan and save many years in advance so you are surprised with the expenses when children are ready to go to College or University.
Why RESP?
RESP program from the Federal government, encourages parents to save for their children for their higher education by giving 20% of their deposit up to the life time maximum of $7200.00 . If the parents/family income is lower than specific income threshold, they can qualify for additional 5%-10% on their first $500.00 annual contribution. Low income family can also qualify for CLB (Children Learning Bond) up to $500.00 and if they are still receiving Child tax benefit, they can also qualify for additional $100.00 in those years.
One of the providers pay extra up to 15% on the contributions the parents make on the top of what they receive from the government.
Depending on from where you purchase the plan, you get different investment options:
Savings deposits
Treasury bills
Guaranteed investment certificates (GICs)
Equities
Mutual funds