RRSP

REGISTERED RETIREMENT SAVINGS PLAN

A Registered Retirement Savings Plan (RRSP) is a personal savings plan registered with the Canadian federal government allowing you to save for the future on a tax-sheltered basis.What makes an RRSP special is that your contributions to it are tax deductible and your portfolio grows tax sheltered. If you are under 72 years of age and earn income, we encourage you to take advantage of the benefits an RRSP can offer.

RESP

REGISTERED EDUCATION SAVINGS PLAN

Registered Education Savings Plans (RESPs) help parents, family and friends save towards a child’s future post-secondary education. We offer Individual and Family Plan RESPs and can help you choose the plan that works best for you. For every $2500 you invest in your RESP the government will grant you 20% of that contribution to a maximum of $500/child/year.

TFSA

TAX-FREE SAVINGS ACCOUNT

TFSAs provide you with a great way to save for any financial goal, whether it’s for a long-term goal like your retirement, or short-term like a vacation or a new family car. A TFSA allows you to pay no tax on interest income to capital gains earned within your TFSA.

Stocks & Bonds Services

Full dealer name: Canada Life Securities Ltd.

Disclosure: Canada Life Securities Ltd., Member of IIROC and the Canadian Investor Protection Fund”

Link to the IIROC AdvisorReport page IIROC AdvisorReport

Link to the CLSL website CLSL Website

GIC

GUARANTEED INVESTMENT CERTIFICATE

A guaranteed investment certificate (GIC) is an investment that works like a special kind of deposit. When you buy a GIC, you are agreeing to lend the bank or financial institution your money for a set number of months or years (the term). You are guaranteed to get the amount you deposited back at the end of the term. For this reason, GICs are one of the safest ways to invest. You can hold GICs in registered investment accounts like RRSPs, RRIFs and TFSAs.

MAKING SENSE OF YOUR INVESTMENTS

Segregated Funds vs. Mutual Funds

Segregated Funds

Mutual Funds
Overview
 Your net premiums are invested in the segregated funds of an insurer which, in turn, invests in securities such as stocks, bonds and money market investments. Segregated Funds are insurance products. Money is pooled and invested on behalf of unit holders in securities such as stocks, bonds and money market investments.
Regulated by
 Provincial Life Insurance Acts Securities Legislation
Capital Growth Potential
 Yes Yes
Track unit value in the newspaper
 Yes Yes
Diversify investments
 Yes Yes
Financial Protection
 At death and maturity, premiums minus withdrawals are usually guaranteed, between 75% and 100%. No guarantees on investment performance. Theoretically, you could lose everything.
Death Benefit
 Beneficiaries receive either the guaranteed death benefit or the market value depending on which is greater. The estate or beneficiaries will get the market value only – there are no guaranteed minimums.
Probate Protection
 At death, proceeds can be paid directly to a named beneficiary, avoiding the estate administration process, and the cost of probate fees. At death, proceeds are an asset of the estate and are subject to the estate, administration process and legal fees. It could be some time before the estate can distribute the mutual funds.
Creditor Protection
 Designations in favour of a parent, spouse, child or grandchild may result in the insurance money being exempt from seizure. This is sometimes referred to as “creditor protection”.

The money cannot have been deposited as:

  • Part of a fraudulent conveyance (transferring money to keep it out of reach of existing creditors).
  • Within a specific time period before bankruptcy
 No protection against the claims of creditors.
RRSP Eligible
 Yes Yes
RESP Eligible
 Yes Yes
Taxation Implications for non-registered investments
 You are only taxed on the income you actually receive. Taxation is based on how long you own the Segregated Fund units within the income period.

  • E.g. if you buy units one day before the fixed date, you are only assessed for one day’s income. The unit seller is assessed for income made before the end date.

You can use capital losses to offset capital gains from other sources.

For accounting purposes, acquisition fees are excluded from the adjusted cost base and treated separately.

 You could be taxed on income you never received. Taxation is based on who owns the mutual fund units on a given date at the end of the income period.

  • E.g. if you buy units one day before the end date, you are assessed for all income earned in that period, even though you did not benefit from that income.

Capital losses must be carried forward by the fund and are not allocated to you, the unit holders.

Acquisition fees are included in the adjusted cost base.
Under what circumstances might these be more suitable?
 Non-registered or registered funds.

Investors approaching retirement.

Investors who like the security of guarantees.

Business owners who want creditor protection.

 Non-registered and registered funds.

Investors who want a wide variety of specialized fund choices in their investments.

Investors willing to give up guarantees for potential increased returns.

“Insurance products, including segregated fund policies are offered through Sterling Wealth Management Inc., and Investment Representatives Peter Pauls, Stephanie Wood, and Larry Hillmer offer mutual funds through Quadrus Investment Services Ltd.

Quadrus Investment Services Ltd. and design are trademarks of Quadrus Investment Services Ltd. Used with permission.”