Do you have a Fear of Investing? 

Investing in equities does carry some very real risks as you do have a chance to lose large sums of money very quickly during a market downturn. Even a fully diversified portfolio of stocks lost half its value during the worst 6 months of the 2008-2009 crises. So if you fear investing your hard earned money, it can definitely be justified!

So what is the solution to get over this fear and how can you achieve your savings goals?

  1. Segregated Funds are a great option for the fearful investor. A segregated fund or “Seg Fund” is an investment fund offered by life insurance companies. A seg fund is similar to a mutual fund but it has additional benefits and features that mutual funds cannot offer. (more info to follow)
  1. Seg funds can have protection against insolvency. Seg funds are considered an asset of the insurance company and held in trust for the investor. That means you are protected against the insolvency of the insurance company, something mutual funds cannot offer.
  1. Segregated funds come with a guarantee. Just like mutual funds, seg funds are invested in equities, bonds and other investments. However, they differ dramatically in that seg funds guarantee all or most of your principle investment upon maturity or death, while mutual funds sold by financial institutions generally have no guarantees at all.
  1. You can invest with confidence at The Co-operators, Carmichael Insurance. Our seg fund guarantees for maturity and death benefit provide peace of mind, protect your investments, and provide confidence during uncertain economic conditions.
  1. Just like mutual funds, seg funds can be invested in a variety of products including RRSP’s, Non-Registered investments, TFSA, RIF, LIRA and LIF

So if you have investments in a mutual fund, you may want to consider switching it to a segregated fund for these reasons:

Maturity benefit guarantee – Depending on the level of protection you choose, your principal investment is guaranteed at 75% or 100% in as little as 15 years

Death Benefit Guarantee – Seg funds have death benefit guarantees that range from 75 to 100% depending on the guarantee level you choose.

Automatic Resets – Depending on the guarantee level you choose and your age at purchase, seg funds have a death benefit rest to protect your investment growth in the event of a premature death. Additionally, an automatic maturity benefit reset exists on the 100/100 guarantee level, which locks in any increase in your funds.

Estate Planning – Both RRSP’s and non-registered segregated funds with a named beneficiary are not subject to probate

Protection from market volatility – While seg funds will be affected by changes in the market, the maturity and death benefit guarantees, along with guarantee resets, give you added protection and peace of mind.

Creditor Protection – Seg funds are life insurance contracts. In the event of a lawsuit or unforeseen bankruptcy, with an appointed family member as a beneficiary, your funds may be protected from creditors. This is a great feature for business owners!!

Don’t let fear stop you from investing, let’s have a coffee and conversation.

Joanne Carmichael is the owner of Carmichael Insurance in the Ottawa Region.  To learn more about how to invest with confidence or just ask a question, please contact Joanne Carmichael at: joanne_carmichael@cooperators.ca  or 613-723-0747.

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