Tuesday, February 2, 2010

Gamble with a guarantee

 

Segregated Funds have maturity guarantees. This means that after 10 years (usually) if you have lost money, the insurance company has to pay you back either 75%, or 100% depending on the contract, of your money. Here is the first such occasion where our office has seen this happen. The image above is an actual RRSP statement we received recently. Personal information has been redacted for privacy reasons. As you can see the original deposit (Net Transaction) was $58,218.41 this was deposited nearly 10 years ago on Feb 25, 2000. The client had invested heavily in the NASDAQ index and we all know how that went. 

  
NASDAQ index from 1999 to 2009 - OH GOD IT BURNS.

So in about three weeks, this client will be receiving a cheque from Industrial Alliance Pacific for 100% of his original investment, $58,218.41 A pretty terrible rate of return for 10 years of time, but far far better than the loss he would have otherwise be stuck with. 


Segregated Funds, it's whats for breakfast.

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