There are many reasons that make investing in segregated (seg) funds a significant strategy when creating wealth. See if these reasons appeal to you and discuss seg funds with your advisor:
- Simplified investing You can select an industry or sector, for example, without having to hand-pick each security. The segregated fund manager does this selection process for you. You don’t have to be assessing which stock or bond may or may not be a winner. A fund manager is trained to weigh out all the market contingencies which can affect investor performance.
- Diversification A small monthly purchase plan can have you moving forward in your strategic fund investments in a day. Your money can buy a piece of many different investments held within one or more funds.
- Dollar-cost averaging Dollar-cost averaging allows you to buy more fund units when the unit values are down, less when they are high, giving you some benefit from downward volatility.
- Flexible access to your money You can sell your fund shares in one day. Your proceeds are available the next day if your money is needed in the short term.
- Portfolio balancing Choices include the full range of fund types and strategies are available to use, such as strategic balancing of your segregated fund holdings.
- Capital guarantees Segregated funds may offer certain principal guarantees at maturity and/or at death. In some cases, market gains can be locked in and guaranteed after a period of time. Some segregated funds have options to lock in a portion or all of the gains to date which resets a guarantee at a higher level after a defined period.
- Avoidance of Probate The proceeds of a segregated fund policy flows to the beneficiaries without going through probate which can avoid significant estate fees. It can also prevent these funds from being contested by disgruntled beneficiaries if the funds passed through a will.
- Potential Creditor Protection Creditor protection is offered because it is an insurance product, insofar as the investment is made before any creditor issues are apparent. Keep abreast of legislation with regard to creditor protection by discussing this with your advisor.