Although it's been four years since the world-wide financial crisis, Canadians are still wary of the stock market and about choosing the right type of investments. This is particularly true for those looking to securely grow their retirement nest-egg. We asked David MacFadyen, regional sales consultant, Individual Savings at Desjardins Financial Security for his suggestions.
"The ongoing market volatility and low interest rates are two major reasons why people today are looking for predictable returns on their investments. Many are turning to conservative products like market-linked term investments (MLTI)," said MacFadyen. "These types of securities are a secure choice because so many investors lost up to 15 per cent of their retirement savings during the last recession. And since most people are living longer in their retirement years, they want to ensure their principal has growth."
What are MLTI? Market-linked term investments are linked to the performance of well-established companies in specific sectors whose products and services are common in everyday use. This type of product is ideal for those who aren't familiar with stock markets. Usually, the minimum investment amount is $500 and it's eligible for RRSPs, LIRAs, RRIFs, TFSAs and non-registered savings. The typical maturity term is five years, there are no management fees and deposits are accepted up to age 95.
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What about death and taxes?
When it comes to estate planning, MLTIs may be more beneficial because it includes a guaranteed death benefit. This means that the amount that you'd like to leave your loved-ones as an inheritance is protected and it is paid out quickly. If you had invested your MLTI in an RRSP or RRIF and your beneficiary is your spouse, he or she would have the choice of holding the investment until maturity. By contrast, if you had invested your MLTI in a non-registered account, your beneficiary, regardless of their relationship to you, could also choose to hold the investment until maturity.
Now, if you own a business, are self-employed or a professional like a doctor, lawyer or notary, it may also provide you with essential creditor protection. Because this type of product is a contract issued by a life insurance company the beneficiary designation could prevent your creditors from seizing your investment, helping ensure you and your loved ones are protected.
To find more information about market-linked term investments, speak with your financial advisor. Or for immediate answers, visit Desjardins Financial Security at www.desjardinslifeinsurance.com.