Frequently Asked Questions
If you are, Segregated Funds are a simple and popular option to help you. Segregated Funds come in many varieties but all offer guarantees on maturity & death and in some cases on income. Segregated Funds offer a full range of investment options making them an excellent fit for people looking for potential returns better than GIC's and who don't want to risk their principal. To learn more about segregated funds and whether they might offer you the "best of both worlds" please give us a call to see for yourself and learn how Moore Financial has been helping Ottawans with their financial needs for 72 years and 3 generations.
This is a common fear for many people and fortunately there is a potential solution in the form of, Long-Term Care (LTC) insurance. LTC insurance can be relatively easy to qualify for and pays a benefit to you, which you can use however you want to help pay for the costs of home or nursing care. Coverage can be purchased individually or as a couple to ensure there would be cash to help either spouse deal with care costs and most benefits increase when actual facility care is required. No doubt you know many people who require some form of care and the reality is that it can happen to you, so please give us a call to discuss how LTC insurance can help protect your retirement savings and preserve your dignity so you don't have to rely on family to help you eat, bathe and/or get dressed, etc.
The good news is you're not alone and there's a safe and relatively easy way to increase your after-tax retirement income while still leaving money for your kids. If you're a conservative investor living off interest income from non-registered investments and you're reasonably healthy, the Insured Annuity concept could be the answer you're looking for. To learn more about how an Insured Annuity can increase your after-tax retirement income and allow you to do something very special for your family - please give us a call.
GIC's offered by insurance companies (called Guaranteed Investment Annuities or GIA's) offer just as much security as traditional GIC's plus several more advantages. GIA interest earnings are eligible for the Pension Tax Credit, while GIC interest is not and if you're over 65 your GIA interest can also be split with a spouse to reduce your overall household income tax. Furthermore, with GIA's you can name a beneficiary which allows these assets to bypass probate & executor's fees on death saving your estate money and allowing beneficiaries to be paid within a few weeks. Finally, just like the CDIC protection for traditional GIC's, insurance company GIA's qualify for a similar $100,000 protection backed by industry organization, Assuris. So if you're planning to purchase GIC's, then why not give Moore Financial a call and consider investing this part of your portfolio into GIA's instead to pick up these additional advantages?
The main reasons people don't insure their investments are probably because they don't know they can or they don't know how. When our clients near the end of their Wealth Accumulation stage, we strongly feel they should take steps to protect the "nest egg" they've worked so hard to accumulate. As such we recommend our clients consider investment products with guarantees that provide protection against portfolio losses. In order to insure your investments, normally it can be done by simply giving up approximately 0.5% of the annual return. So hypothetically assuming a $200,000 portfolio suffering a 20% ($40,000) loss it would have only cost about $1,000 less return/year to protect the $40,000 which in hindsight everyone would have done. If you feel now is the time to give up a little return to put down a "floor" to ensure your investments, please give Moore Financial a call to discuss how we can help.
One of the easiest and most effective wealth accumulation investments you can make for a grandchild is to purchase a permanent life insurance contract. The concept takes advantage of the low cost to insure a grandchild, while the grandparents act as the policy owners and premium payers. This policy set-up locks in the grandchild's insurability and allows the Policy owner on a tax-free basis to build huge cash values and future death benefits - all of which can be transferred tax-free to the grandchild a a later date for them to use as they see fit. Because the cost of insurance is so low and the time horizon could be 60, 70 or even 80 years; relatively modest annual premium amounts can generate hundreds of thousands of dollars of cash value and millions of dollars in death benefit. If you would like to do something simple that doesn't require active management on your part but is very powerful financial for your grandchildren, please give Moore Financial a call to find out more.
If you're seeking potentially better returns than GIC's and your RRIF/LIF is invested into mutual funds or certain segregated fund products, then your principal probably isn't protected when taking income withdrawals in down markets. This may not seem like a big deal, but it can be. Assume you have a $100,000 RRIF, you withdraw, $6,000 / year leaving you with $94,000 of principal and then your investment declines during the year by 19%. Your year-end market value would be $84,600 yet you've only taken out $6,000. Assume this happens again, at the end of Year 2 your RRIF would be worth $70,740 but you've only taken out $12,000. In summary if you're making regular withdrawals, sometimes you'll find yourself needing to make them in times of decline. Please give us a call to discuss how proper investment product selection is an easy way based on our example to ensure you would still have $88,000 of principal to live off.
If your answer is YES, the very simple and highly effective “Estate Bond” strategy can help you meet both these goals. To create an “Estate Bond” you simply take excess savings earmarked for your children and instead of for example, investing these funds into fully taxable GIC’s, you purchase a life insurance contract and use this money to pay the premiums. By redirecting these funds you weren’t spending anyway into a life insurance policy, you can significantly increase the estate you leave your children (and/or favourite charity) by moving dollars from a tax-exposed environment into a tax-sheltered one reducing the tax you pay today and in the future. Spending a little of your time could potentially leave hundreds of thousands of dollars more for your children … so please give us a call to learn how you can help you do this for your family.
This situation applies to segregated fund contracts whose main guarantees are normally for maturity, death and/or income. When withdrawals are made from segregated fund RRIF’s, the contract’s respective guarantees are reduced. For RRIF withdrawals most companies apply proportionate reductions to the guarantees, which essentially means in down markets the guarantees get negatively reduced by an amount greater than the withdrawal. However “dollar for dollar” reduction contracts ensure guarantees are favorably reduced only by the withdrawal amounts. Therefore, if you’d like to make sure you chose the right type of RRIF contract for a properly structured retirement portfolio which optimizes income and sustainability, please give us a call.