By: Kevin-Barry Henry, #1 Bestselling Author
The recent market downturn has many people in Canada wondering if the party is over or if this is simply the market taking a breather before starting another big run up. The truth is that nobody knows what the future holds, and if anyone tells you that they do, be warned that they are lying.
So, what can a person do to make sure the hard-earned gains that they have (hopefully) acquired over the last 18 months or so are locked-in and guaranteed?
What if you could buy an insurance policy on your market gains? Guaranteed Investment Funds also known as Segregated Funds are like buying an insurance policy on your principal investment and your also will protect your hard-earned gains.
Those of you who read my article HOW SEGREGATED FUNDS CAN HELP YOU SLEEP EASIER will already know. It covers a lot of reasons why Canadians should consider incorporating segregated funds as part of their portfolio. Guarantees in a portfolio just make sense, as you near retirement and especially if you are already there (congratulations!).
A financial opinion article that I recently read in a national newspaper focused on the maturity benefit, advising readers not to buy a product that protects you from losing money in the stock market after markets have crashed. The following important points were missed.
- The death benefit guarantee protects deposits and hence beneficiaries and estate values during a roller coaster ride where:
- markets fall, then rise again, only to fall again and
- later on, the owner passes away.
- The reset feature, which locks in higher values on policy and “re-sets” your guarantee at the new higher value. That helps to keep the guarantee relevant over time.
- The death benefit guarantee is available regardless of the health of the annuitant or the policyholder. This is extremely important as it relates to estate planning!
- The writer states that the best time to buy a segregated fund might have been before the markets crashed, not after, though that advice wasn’t shared back then. Prudent investors and advisors recognize that this akin to timing the market. It’s time in the market that counts. Death does not time the market.
A maturity guarantee is not the same as a death benefit guarantee, which is available anytime during the contract period. The death benefit guarantee amount may even be higher if market values are higher than initial deposits on reset dates.
Almost 9/10 Canadians, aged 55 and over want investments with guarantees on the principal and they want growth opportunities for those investments. The financial literacy gap is that 6/10 don’t know this option exists with guaranteed investment funds, available from insurance companies. (Source: Ipsos poll, Nov. 2016; Could guaranteed investment funds help your business and corporate clients? Advisors Edge, Nov. 10, 2018)
Now think of the concern that small business owners may have with protecting their assets in the event of problems or issues with their business. Why segregated funds? These contracts allow investors to name beneficiaries which in turn may protect the value of a business owner’s personal investments at maturity or death from creditors.
In fact, for people letting their money grow for the long term, the death benefit guarantees can only go in one direction…up! Guarantees are reduced proportionately for withdrawals. And potential gains can be periodically locked in during the investor’s lifetime. That keeps the guarantee relevant.
Improving the financial literacy level and incorporating product solutions that offer guarantees in your portfolio that go up when the market does and stay there when the market goes down is a win-win for Canadians. It helps to take anxiety out of the investing process. And there are so many more features and benefits of segregated funds beyond the guarantee.
Take the opportunity to learn more about guaranteed investment funds, especially when the market is acting grumpy. I would be happy to go over the benefits and how they would help you protect your nest-egg and your hard-earned gains. For a free 15-minute call, just book a time that suits you here: FREE 15 MINUTES WITH KB.
I hope to hear from you.
With Gratitude,
KB.
THIS ARTICLE IS PROVIDED AS A GENERAL SOURCE OF INFORMATION ONLY AND SHOULD NOT BE CONSIDERED TO BE PERSONAL INVESTMENT OR LEGAL ADVICE. READERS SHOULD CONSULT WITH THEIR FINANCIAL OR LEGAL ADVISOR TO ENSURE IT IS SUITABLE FOR THEIR CIRCUMSTANCES.