Mutual Funds vs. Segregated Funds

Author: Westgroup Financial Management Inc. | | Categories: Financial Advisor , Investment Services , Personal Financial Management

Blog by Westgroup Financial Management Inc.

Many investors have heard about mutual funds and the wealth potential they have as an investment. However, very few know about segregated funds and their unique features. Like mutual funds, segregated funds are pooled investments. They combine the money of many investors, creating economies of scale and giving you access to investment opportunities that might not be available otherwise. As experts in the field, we at Westgroup Financial Management Inc have written down information that will help you decide if you need to go the mutual fund or the segregated fund way. 

A. Mutual funds
Mutual funds let investors pool their money together in a fund that’s managed by a qualified investment firm. It’s a process that diversifies your investments, potentially limiting your exposure to market fluctuations. For many people, it’s a very attractive investment option because it’s cost-effective and can be customized to your unique risk tolerance. There are many different types of mutual funds, which means it’s possible to create an investment package to match your specific risk tolerance. If you want to be more aggressive, there are growth-focused speciality funds available to help you. And if you want to take a more conservative approach, there are funds to match your tolerance for risk, too.

B. Segregated funds 
A segregated fund policy is similar to mutual funds, there’s a pooling of investments. But unlike mutual funds, a segregated fund policy includes insurance guarantees that can protect much or even all your original investment. It helps bypass probate (the process by which a court formally approves a will as the valid and last testament of the deceased person), thereby minimizing the costs of probate. Your assets within a segregated fund policy, whether registered or non-registered, may be protected from creditors, where a specific type of beneficiary like a spouse or a child has been named. It also means that your assets may be passed onto your beneficiaries without being exposed to creditors in the event of your death.

Segregated funds and mutual funds are both investment-related sources. Both have their advantages and disadvantages. You will need to make an overall financial plan and decide whether segregated funds, mutual funds or both are best for you. With both mutual funds and segregated funds, it is important for you to check what fees are charged. This can have a huge impact on your long-term returns. The only key difference from a mutual fund is that a segregated fund is an investment within an insurance contract. This provides extra advantages, including guarantees, which is why a segregated fund costs more. 

If you are looking for financial planning consultants in South Surrey, BC, then reach out to us at Westgroup Financial Management Inc. Our passionate professionals are helping families and businesses succeed in their financial goals. Our team is highly committed to ensuring your success through a calculated strategy. We are experts in financial planning and specialize in finding the best solutions to meet your financial needs. We have built our business around integrity and honesty with a focus on changing your financial path for the better.

We offer services like wealth management, financial investments, insurance planning, estate planning, business services, and charitable giving. We serve clients across South Surrey, White Rock, Delta, Vancouver, West Vancouver, North Vancouver, New Westminster, Coquitlam, Burnaby, Langley, Chilliwack, Port Coquitlam, Port Moody, Mission, Abbotsford, Pitt Meadows, Maple Ridge, Squamish, Whistler, Victoria, Nanaimo, Kelowna, Penticton and Kamloops, BC. To learn more about the services we offer, please click here. To get in touch with us, please click here.