Segregated Funds are similar to mutual funds. The major difference is the tax benefit associated with a segregated fund. Unlike mutual funds, a segregated fund has a death benefit that is payable directly to the beneficiary without having the funds pass through probate and estate. The death benefit payable is equal to the market value of the fund or a guaranteed minimum.
The full amount or a portion of the original principal (capital) invested is also guaranteed in segregated funds. Many segregated funds will guarantee 75% to up to 100% of the original capital at the time of maturity (10 years). After maturity, the investor will receive the greater of either the original capital or the market value of the fund.
In addition, segregated funds are creditor protected, which makes this investment appealing to many business owners who want to protect their personal assets from business liabilities.
Segregated Funds are also appealing to low-risk tolerant investors who want to preserve their capital, yet at the same time want the opportunity to earn a higher rate of return than a GIC.
If you would like to learn more about Segregated Funds and how to take advantage of its tax benefits and creditor protection,
CITY Finance Advisor can help you begin planning today.
