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Segregated Funds and Annuities - Chapter 1_ Investment and Savings
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Segregated Funds and Annuities - Chapter 1_ Investment and Savings
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Segregated Funds and Annuities - Chapter1: Investment and Savings
Segregated Funds and Annuities - ANS-Investment and savings products marketed to
Indvidual and group prospects and clients
Compounding - ANS-Usually refers to earning interest on an investment.
Nominal Return - ANS-Stated or advertised rate. For example, a savings account is
advertised with a 2% return.
Real Return - ANS-Calculated as the nominal return on an investment minus the rate of
inflation.
Three main asset classes - ANS-Stocks (equities), bonds (fixed income or debt), and
cash (money market instruments).
Two other classes that are often added - ANS-Real estate and Commodities.
Diversification - ANS-Manages risk. Combining asset classes and investments within
those classes, investing risk will be lower and the expected overall returns may be
higher than if savings were put into one investment.
Diversified Instrument Example - ANS-Segregated Funds, Mutual Funds, and
Exchange-Traded Funds (ETFs)
Liquidity - ANS-The ability to cash in, or sell, an investment quickly at or near its current
market price.
Liquid Investment Example - ANS-Savings Account
Illiquid - ANS-An investment that does not have characteristics of liquidity
Illiquid Example - ANS-Real Estate
Present Value Formula - ANS-PV = FV / (1 + i)^n
Future Value Formula - ANS-FV=PV(1+r)^n
, Short term Objective - ANS-A goal to be met in 3 years or less
Medium Term Objective - ANS-A goal to be met between 3 to 10 years
Long Term Objective - ANS-A goal to be met in 10 years or more
Registered Retirement Savings Plan (RRSP) - ANS-Retirement
Registered Education Savings Plan (RESP) - ANS-Post secondary education costs
Registered Disability Savings Plan (RDSP) - ANS-Income for a disabled dependant
Tax-Free Savings Account (TFSA) - ANS-Tax-free investment growth
Registered Pension Plan (RPP) - ANS-Retirement savings for members of a group
Time Horizon - ANS-A future event when invested money will be needed to meet
financial objectives
Time Horizon Example - ANS-The time horizon for someone saving for retirement is
when retirement occurs.
MER - ANS-Management Expense Ratio
Where and How to Buy Segregated Funds - ANS-SF are primarily sold by life insurance
agents and brokers. Some are sold by investment dealers, but those dealers act as life
insurers; the investment dealers are only a sales channel
Information Folder - ANS-The agent provides this to the investor before or at the time of
purchase. It describes the key benefits of the contract. It also provides info about the
fund itself, such as fees the investor pays and past performance
What is a protection fund? - ANS-A protection fund would be something like Assuris (a
product of the insurance industry) or CDIC (Canada Deposit Insurance Corporation -
banking industry)
From what is the name "individual variable insurance contracts" derived? - ANS-derived
from the fact that the individual is purchasing an insurance contract that will have
variable returns.
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