5 Times a Guaranteed Investment Fund Makes Sense for Retirement
Here’s how to decide whether Guaranteed Investment Funds should be a part of your retirement plan.
Here’s how to decide whether Guaranteed Investment Funds should be a part of your retirement plan.
According to the Canada’s Chief Actuary Jean-Claude Ménard, Canada is projected to continue to have one of the highest life expectancies in the world, along with Japan, France, Switzerland, Italy, and Australia.
According to the Canada’s Chief Actuary Jean-Claude Ménard, Canada is projected to continue to have one of the highest life expectancies in the world, along with Japan, France, Switzerland, Italy, and Australia.
Future gains in longevity are expected to result in many Canadians living beyond age 90, three years longer than the average lifespan today. Currently, five out of ten Canadians who are 20 years old are expected to reach age 90. One out of ten is expected to reach 100 years of age.
Future gains in longevity are expected to result in many Canadians living beyond age 90, three years longer than the average lifespan today. Currently, five out of ten Canadians who are 20 years old are expected to reach age 90. One out of ten is expected to reach 100 years of age.
Canadians face more years of saving, work as chief actuary increases life expectancy
Canadians face more years of saving, work as chief actuary increases life expectancy
Financial post
1. You want guaranteed income for life.
1. You want guaranteed income for life.
Many Guaranteed Investment Funds have an option that allows the contract owner to get guaranteed income until they die. This income won't decrease due to market volatility, making it a smart bet for people whose priority is making sure they have a base income as they age.
Many Guaranteed Investment Funds have an option that allows the contract owner to get guaranteed income until they die. This income won't decrease due to market volatility, making it a smart bet for people whose priority is making sure they have a base income as they age.
2. You hope to secure guaranteed income for a spouse.
2. You hope to secure guaranteed income for a spouse.
With certain types of Guaranteed Investment Funds you can add the option to provide a lifetime guaranteed income for not just you, but also your spouse. If this option is selected, the guaranteed income from your fund will extend until your spouse passes away, and beyond.
With certain types of Guaranteed Investment Funds you can add the option to provide a lifetime guaranteed income for not just you, but also your spouse. If this option is selected, the guaranteed income from your fund will extend until your spouse passes away, and beyond.
3. You want a low-risk portfolio above all else, and maximize growth.
3. You want a low-risk portfolio above all else, and maximize growth.
When we talk about "guaranteed" income for retirement, we're talking about income that requires little risk. As long as you understand the terms of your guaranteed investment, you can have secure guaranteed, no-risk income for life. For retirees who fear volatility in the markets or running out of money, guaranteed investment funds can make a lot of sense, says financial advisor Bernie Petkau of Advisor & Co. Wealth Management. "Guaranteed Investment Funds are safe and tend to outperform most forms of individual agents who work for there company, unlike a broker that works for you," Petkau says. While your return is low to zero risk and the ability to lock in profits and taking advantage of market growth is huge. The 40 year average of market returns has produced a return of 11.8% annually." says Petkau.
When we talk about "guaranteed" income for retirement, we're talking about income that requires little risk. As long as you understand the terms of your guaranteed investment, you can have secure guaranteed, no-risk income for life. For retirees who fear volatility in the markets or running out of money, guaranteed investment funds can make a lot of sense, says financial advisor Bernie Petkau of Advisor & Co. Wealth Management. "Guaranteed Investment Funds are safe and tend to outperform most forms of individual agents who work for there company, unlike a broker that works for you," Petkau says. While your return is low to zero risk and the ability to lock in profits and taking advantage of market growth is huge. The 40 year average of market returns has produced a return of 11.8% annually." says Petkau.
4. You want to create your own pension.
4. You want to create your own pension.
Decades ago, workers relied on guaranteed pensions to fund retirement. Today, very few workers enjoy this level of financial security. That's why retirement today has become increasingly difficult, says Alex Whitehouse, a financial advisor in Vancouver, BC. "Retirees used to count on the three-legged stool for their retirement income: Canada Pension Plan, employee pensions and individual savings," Whitehouse says. Now, only a small fraction of private sector companies provide traditional pension plans. "A guaranteed investment fund could be used to generate lifetime income and replace the pension leg of the stool," Whitehouse says.
Decades ago, workers relied on guaranteed pensions to fund retirement. Today, very few workers enjoy this level of financial security. That's why retirement today has become increasingly difficult, says Alex Whitehouse, a financial advisor in Vancouver, BC. "Retirees used to count on the three-legged stool for their retirement income: Canada Pension Plan, employee pensions and individual savings," Whitehouse says. Now, only a small fraction of private sector companies provide traditional pension plans. "A guaranteed investment fund could be used to generate lifetime income and replace the pension leg of the stool," Whitehouse says.
5. You want to protect your retirement assets from taxes.
5. You want to protect your retirement assets from taxes.
Traditional retirement accounts like RSP and RRSPs grow tax-deferred, meaning you don't pay taxes on your money until you begin making withdrawals. Guaranteed investment Funds also provide tax benefits. "Using a GIF for a portion of your assets will allow your money to grow tax-deferred," says financial advisor Josh Brein. "Also, the proper use of a TFSA will greatly lower the taxes load or payable during retirement."
Traditional retirement accounts like RSP and RRSPs grow tax-deferred, meaning you don't pay taxes on your money until you begin making withdrawals. Guaranteed investment Funds also provide tax benefits. "Using a GIF for a portion of your assets will allow your money to grow tax-deferred," says financial advisor Josh Brein. "Also, the proper use of a TFSA will greatly lower the taxes load or payable during retirement."
When it comes to investing for retirement, annuities should get a bad rap. Not only do some annuities come with high fees that are hard to justify, but they are notoriously difficult (or impossible) to liquidate when you need cash. Further, some annuities are so complex that even experienced investors can hardly understand them.
When it comes to investing for retirement, annuities should get a bad rap. Not only do some annuities come with high fees that are hard to justify, but they are notoriously difficult (or impossible) to liquidate when you need cash. Further, some annuities are so complex that even experienced investors can hardly understand them.
So, should you even bother with an annuity? Well, it depends. Not all annuities are created equal. It might be worth giving them a chance if your retirement goals fall under a specific set of criteria. For most types of investors heading toward retirement, AVOID ANNUITIES, Guaranteed Investment Funds are probably one of best options available. Above are some of the situations where Guaranteed Invest Funds work best:
So, should you even bother with an annuity? Well, it depends. Not all annuities are created equal. It might be worth giving them a chance if your retirement goals fall under a specific set of criteria. For most types of investors heading toward retirement, AVOID ANNUITIES, Guaranteed Investment Funds are probably one of best options available. Above are some of the situations where Guaranteed Invest Funds work best:
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$100,000 investment left sitting for 20 years
$100,000 investment left sitting for 20 years
- average typical bank RRSP vs
- average typical bank RRSP vs
- Guaranteed Investment Fund
- Guaranteed Investment Fund
- Moderate Blend Zero risk investing
- Moderate Blend Zero risk investing