What Are Segregated Funds and Are They Right For Me?

golden egg and canadian dollars

It can be confusing in the world of investment choice.  Do you sacrifice security for higher returns?  Or do you play it safe and go the guaranteed route locking yourself into low returns?  Fortunately for Canadian investors there is another option: Segregated Funds.

What are Segregated Funds?

Seg Funds are similar to mutual funds but only sold by life insurance companies which allow for the special “insurance” feature that makes segregated funds a safer investment. Read More

Tips on Buying a GIC

GIC rates have been at record lows for almost 5 years now.  Many investors are wondering how to invest in GICs when rates are so low.  There are a few things to consider when investing in this low interest rate environment:

1)  Find the highest GIC rate possible.  Most GICs are the same thing:  they guarantee principal and interest and have a maturity date.  If almost all GICs are the same thing, then why not go for the best rate?  Many GIC investors think they will simply go to their local branch, and because they are a good customer, they will be given the best rate.  THIS IS NOT TRUE!  GIC rates change every day, and you need to do your research to find who has the best rate (or use a deposit broker to do this for you for free).  Just because your local bank is convenient and huge, does not mean that they will have the best rate.  Usually it is the opposite:  banks have many sources of capital, so the need for high GIC rates is unnecessary, and when you have shareholders to report to, why pay out high rates?

2)  Keep the terms short.  Interest rates are expected to increase in 2014.  With that in mind, why lock in for multiple years record low rates?  Stay short with your terms for now, as the difference between 1 year and 5 year rates are not that great, and when rates start to rise, consider going longer term at better rates.

3)  Watch out for how much of your money is insured.  Banks and trust companies insure your money through CDIC, up to $100,000.  BC-based credit unions are members of CUDIC, and they insure your deposits up to an unlimited amount.  Make sure the institution you place your business with insures the full amount of your money.

Buying a GIC may seem simple, but you want to make sure you get the best GIC rates, while having your money insured for failure.  Working with an experienced Deposit Broker is the best way to do this, and we would love to help you get the best rates!

Please call us today to find out more!

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