A Mar ** financial product

His name is Daniel. Nevertheless, he will be 65 years by the end of the year and will soon retire. For example, Here is what he says: “I was not lucky with my financial planners, I explain to you …”

I explain to you, it will be simpler. In addition,

Two decades ago. Therefore, a financial security advisor, a knowledge of his ex-spouse, led him to invest in a separate fund of a large insurance company. However, It was seduced by the promise of partial protection of capital. For example,

He has since continued to pay money every month, “a guaranteed minimum return fund,” said Daniel. However, His advisor retired a few years ago. Meanwhile, his replacement for the insurer does not do much, “if not to collect management fees and mar ** financial product send automated emails.”

Most of his nest egg is placed in this fund, another third of his assets are at Desjardins. Similarly, In anticipation of his retirement, he met an advisor there last year. However, According to our reader. Nevertheless, it clicks between him and the guy from the cash register, but, when he tried to communicate with the latter recently for his disbursement plan, it was informed that he had left elsewhere. Furthermore,

“This is what I deplore with Desjardins, you can never have continuity with a representative, it changes all the time”. Meanwhile,

— Our Daniel reader

It is as in all the major institutions. Similarly, unfortunately, especially when they siphon their costs with a modest portfolio, which is the case of Daniel. Consequently, See the irony: with his $ 900. Therefore, 000 house, mar ** financial product our reader is one of those small millionaires of which I told you on Tuesday, and he is not entitled to many regard to the financial services industry, because it is not rich enough. Similarly,

Now he would like my planner advice, but I’m not. In addition, The Daniel reader could concentrate his assets at Desjardins, which improved his chances of obtaining the lights of an advisor. He could also offer the services of an independent fee financial planner who would concoct a disbursement plan for him.

Or. he could transport his penates to a cabinet where he is entitled to more consideration and better financial products, I suggested a collective savings broker in his corner, in Sherbrooke.

“If my retirement capital is guaranteed by this firm, I am ready to move,” he replied. It doesn’t work the same, unfortunately. He got mar ** financial product it into the head by an insurance seller 20 years ago.

Mar ** financial product

Losers’ investment products – Mar ** financial product

The story of our reader is punctuated by irritants. but the worst is the separate fund of the insurer, a product to be avoided, unless you are prey to cancer as incurable as it is an active.

What is it? It is a product similar to mutual funds, but with guarantees, guarantees that cost expensive without adding added value.

They can easily be identified by these figures attached to them: 75/75, or 75/100, or 100/100. What does it mean? With a 75/100 fund. for example, the contract transmitter (the insurer) guarantees 75 % of the capital at maturity (10, 15 or 20 years) and 100 % on death.

When Daniel evokes “guaranteed yields”. that means that the guaranteed capital to maturity mar ** financial product and death increases by 5 % per year (not composed). If the return of the fund exceeds 5 % for a few years in a row. the guaranteed capital can be reset to a higher level corresponding to the performance of the fund. The deadline from the moment the warranty can be applied is then pushed.

According to the options chosen. these funds also offer annual income for life equivalent to 5 % of the guaranteed capital when the saver breathes 65 candles.

Costs that accumulate

All this seems very beautiful on paper, but the costs are packed as we add guarantees. A 100/100 product costs more than 75/75. If the fund is concentrated on the stock market. the cost of capital protection will be higher than if the money was invested in a prudent manner. To be entitled to vigor payments mar ** financial product after 65 years, new costs are added.

At the end of the day. the saver often finds themselves to caste more than 3 % of all kinds of costs each year, and it can rise to more than 4 %.

What is the risk that a balanced portfolio is decreasing by 25 % over a period of 10, 15, or 20 years? Almost zero! It is however to protect himself from this risk that the holder of the separate fund pays a bonus.

As for the risk of losing feathers before dying, it depends. If the death is imminent, I don’t say … and again.

As for the regular income offered by this type of product. it most often amounts to buying a life annuity, but more expensive, concluded an analysis of the CIRANO published 12 years ago. mar ** financial product

Comparison with the index negotiated index funds over the entire period of accumulation. disbursement can be humiliating for the insurance product. The FNB leaves with an advantage of 3% per year by the mere fact of its low cost. Over 50 years, the gap of the gains looks like the Grand Canyon.

An unnecessarily complex product

I have consulted the prospectus of the product in which the Daniel reader invested (I silence the name. that of the company, I want to avoid trouble before the holidays, and the products are all alike), it has 156 pages of abstruse explanations and fallacious graphics. Hello simplicity!

For example. he compares the growth of the guaranteed capital compared to the performance of the market from which the funds are subtracted. The parallel is flattering. but if the document presented the curve mar ** financial product of real yields, without the expense, the neophyte would see at first glance that the product makes Pic-pic.

It is the third or the fourth time that I have been getting against separate funds in the past 15 years. Several studies have shown that the costs of protections are completely undergoing the effectiveness of these products. Simulations led by an RBC analyst (Paul Mayhew. 2008) had shown that the life -income income of a separate fund did not compete at any time with a portfolio of shares and obligation since … 1930! The only time it could have been beneficial was in 1928 before the crash that led to the great depression.

And yet, it is still sold as much, savers remain obsessed with the word “guaranteed”.

If you want to react to this column, write us to opinions@cn2i.ca. Certain responses could mar ** financial product be published in our opinions section. If you want to contact our columnist directly, you can do so at dgermain@cn2i.ca.