Investments Products

MUTUAL FUNDS - can cover the spectrum of investing

Most of us have heard of, and/or use mutual funds. They are best described as a pool of money contributed by many like minded investors and invested on their behalf by a professional money manager. It should be noted that mutual fund returns are NOT guaranteed and there is a chance of losing your invested money. Mutual funds are categorized into several different risk levels. It is important to talk to an advisor to establish the most suitable risk level for your investing dollars.

A mutual fund may buy stocks, bonds, short-term bank notes or a combination of any of these. Two big advantages to investors are: the diversification of investments, as mutual funds will hold many different investments at any one time. Unlike term deposits, which are locked in for the length of the term, a mutual fund can be sold at any time.

With the low minimum amounts required by today's mutual fund companies they are the most common choice among start up investors to obtain access to the different investment markets. The ease of setting up monthly contribution plans make them a good choice for those building investment plans. The large option of income producing funds are also making this type of investing a first choice for retirees as an alternative to low interest paying term deposits.

It should be noted that mutual fund returns are NOT guaranteed and there is a chance of loosing your invested money. Mutual funds are categorized into several different risk levels. It is important to talk to your advisor to establish the most suitable risk level for your investing dollars.

SEGREGATED FUNDS - like mutual funds with a twist

Segregated funds are the insurance industries answer to a mutual fund in that they can be described as a pool of money contributed by many investors and invested on their behalf by a professional money manager. The two biggest advantages of segregated funds over mutual funds, to investors, are the certain guarantees offered and the ability to name a beneficiary even with non-registered investments. This option of naming beneficiaries should be explored over the option of putting investments in joint names with anyone other than a spouse. Although income tax may still be owed, by naming a beneficiary you can provide for the transfer of assets upon death without paying any probate costs.

Segregated funds hold many different investments at one time providing instant diversification, and unlike term deposits, can be bought and sold at any time without waiting for maturity.

Segregated funds can be categorized into several different risk levels:

  • money market funds provide a safe, liquid, interest earning investment
  • bond funds provide access to interest bearing investments with the potential for capital gains
  • equity funds provide access to stock holdings without the need for you to choose which individual companies to own
  • balanced funds provide a combination of money market, bonds and equities all in one fund allowing the manager to make your decisions on asset diversification for you
  • foreign or domestic funds can provide access to investment opportunities around the world. Canada only represents 3% of the worlds' investment opportunities

Segregated funds offer certain guarantees that are not available to mutual funds.

  • the ability to name a beneficiary
  • creditor protection in some cases, an important aspect for small business owners
  • market value guarantees upon death
  • market value guarantees if held to maturity
  • some products can offer a guaranteed income stream for life

As an insurance licensed advisor in British Columbia and through my association with PPI Solutions, a Manufactures General Agency, I have access to most of the insurance company investment divisions in Canada. Companies like Empire Life, Manulife and Sunlife to name but a few.

It is also important to note that segregate funds daily market values are NOT guaranteed and may go down in value. Not only is there the potential to make decent returns investing in segregated funds, there is also the chance to lose money. It is important to talk to your advisor to establish the most suitable risk level for your investing dollars and to fully understand the guarantees that are being offered to you.