Investments

 

Types of Investments

 

Segregated Funds

Segregated funds are similar to mutual funds but are purchased through an insurance company. Unlike mutual funds there are some advantages: - they bi-pass probate - there is guarantees on the investment - there are reset options on the guarantee - they are creditor protected. The funds for the segregated funds however are usually slightly higher than that of a mutual fund. You can invest in - TFSA's - RRSP/RIF's - RESP's - LIRA/LIF's and non-registered investments.

Mutual Funds

Mutual funds are a collection of stocks from various companies (usually within the same industry class). By using funds like this you are spreading your risk across several companies unlike stocks on the stock market where people usually purchase 1 or 2 different companies. The portfolios for mutual funds vary by industry sector and risk factor on the growth. You can invest in - TFSA's - RRSP/RIF's - RESP's - LIRA/LIF's - RDSP - and non-registered investments.

GIC (Guaranteed Income Certificate)

GIC's are usually sold through banks however some insurance companies offer GIC's as well. The GIC is usually locked in for a specific amount of time and have a fixed interest rate.

TFSA (Tax Free Savings Account)

TFSA's are a type of investment where the growth on the investment can be withdrawn tax free. You can contribute 5,500 per year and it is cumulative since TFSA's were introduced.

RRSP / RIF (Registered Retirement Savings Plan / Registered Income Fund)

RRSP and RIF's are registered savings for retirement, there was an income tax deduction on taxable income when contributions were made. There is income tax payable when funds are withdrawn from these funds. In the year you turn 71 your RRSP's must be converted to RIF's.

RESP (Registered Education Savings Plan)

A RESP is a registered plan to help pay for children's education. There are government contributions based on a percentage of the contributions made to a child's RESP.

LIRA / LIF (Locked In Retirement Account / Life Income Fund)

When a person retires they may have the option to commute the value of their pension. The commuted value is placed into a LIRA and must be converted to a LIF the year the contributor reaches 71. Income tax is payable on these investments when funds are withdrawn.

 

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