| How do you purchase seg fund units? |
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Segregated funds are professionally managed. They offer an investor the ability to pool money with other investors in order to achieve growth from many stocks, or interest from bonds and other securities. Fund units that are issued to you represent your portion of ownership in a segregated fund. How Are Distributions Handled? Depending on the assets held, distributions could include Canadian dividends, foreign income, other income, and capital gains. A seg fund may also realize capital gains upon a disposition of fund assets. It is also possible for a seg fund to incur capital losses on the disposition of fund assets. Fund income as well as capital gains and losses are allocated each year to the contract holders. Tax rules that apply to seg funds are quite complex, especially when a spouse dies who holds a seg fund contract in an RRSP. However, there are tax strategies that your financial planner can develop to make the use of seg funds beneficial. You may be a good candidate for seg fund use if: - You are a conservative investor and yet want higher returns than GICs offer.
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The value of your interest in a seg fund is equal to your share of the securities owned by the seg fund. This is credited in terms of a number of units you own as an interest in an investment portfolio as stated in an insurance policy contract. You pay premiums that "deposit" money into a seg fund policy that further invests in the seg fund. Seg funds offer the potential to either gain or in some cases lose capital.