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Financial Planning
Investment Choices

BC Ferry in the distance
BC Ferry in the distance
A GIC (Guaranteed Interest Contract) where a single deposit is made, and at some future date a payout is made in a lump sum.  The interest rate is guaranteed.
Mutual Funds
Mutual funds are a professionally managed investment in a group of stocks and/or bonds that are selected and diversified to meet the stated objective of the fund.

They are often defined by themes. For example, a "Global" fund would invest in companies around the world, while a "Property" fund would invest primarily in real estate.

Mutual funds are a method of investing in various underlying investments such as stocks, bonds, mortgages, treasury bills and real estate.

Mutual funds provide the advantages of professional investment management, liquidity, investment record keeping and diversification.

Investing through mutual funds is the indirect ownership of the underlying investment vehicles.
Segregated Funds
Segregated funds work like Mutual funds, but they offer a death benefit guarantee, have a maturity guarantee and creditor protection.  The management expense ratio is usually slightly higher than for a mutual fund.  Personally I have always had segregated funds as I have always been in business and want those guarantees.

A stock is a certificate of ownership in a corporation. It is the same as a share.

Also known as equities, they give you an ownership interest in the company issuing the stock. A stock does not have a fixed, objective worth. At any moment, it is only as valuable as people perceive it to be. Stocks may be either preferred or common. Given a long-term horizon, some of the risks inherent in stock investing can be reduced.

Owning stocks in a company makes you part owner of that business. If the company is successful the value of the stocks will rise or it will be able to pay a higher annual dividend. The better the company does, the better the investor does.

These stumps are what are left after a wind storm in Cathedral Grove

A sealion on a buoy in Nanaimo harbour
Bonds are debts issued by companies or governments who guarantee payment of the original investment plus interest by a specified future date

Bonds are tradable instruments (debt securities) which are issued by a borrower to raise capital. They pay either fixed or floating interest, known as the coupon. As interest rates fall, bond prices rise and vice versa.
An annuity is a contract sold by a life insurance company that provides fixed or variable payments to an annuitant, either immediately or at a future date.

An annuity is considered to be the opposite of life insurance where a death benefit is paid. An annuity provides a benefit while the insured is alive. This is a contract that provides an income for a specified period of time.

There are many types of annuity and you can find definitions of each on the web. Here are definitions of some of the more common types of annuities.

Annuities can be purchased with registered money for retirement income and is all taxed. The income can be for the life or one more person - see single premium immediate annuity and joint last to die annuity.

Annuities can be purchased with non-registered money, see prescribed annuities.

Trying to get the dog to swim
Trying to get Kayla
to swim across
Single Premium Immediate Annuity
A regular income stream purchased with a lump sum investment, where the income stream starts immediately after the purchase. They are usually provided by a life insurance company for the purposes of retirement income.

Prescribed Annuity
A prescribed annuity is purchased with non-registered assets. It provides the annuitant with a regular stream of pre-specified income payments throughout the term of the annuity. Because income tax would have been previously assessed on the original principal, only the interest portion of the payment is taxable.

Single Premium Immediate Annuity
a regular income stream purchased with a lump sum investment, where the income stream starts immediately after the purchase. They are usually provided by a life insurance company for the purposes of retirement income.

Joint last to die Annuity
A joint last to die annuity is where a series of payments is made to two annuitants.
The annuity payments continue until both of the annuitants have died.
Payments to the survivor may be the same or reduced after the first death.
Gill, Chris and Kayla