Segregated Funds & Annuities Certification Exam Latest Update Graded A+

Segregated Funds & Annuities Certification Exam Latest Update Graded A+ Canadian Pension Plan Benefits CPP Income Formula = 8.4% annual tax x number of years x CPP at age 65 RRSP Contributions RRSP Contribution Room Formula = Income x 18% Market-Linked GIC A market-linked GIC has an interest rate that is tied to the performance of the stock market, providing the potential for a higher interest rate in the case of positive market returns. While the returns can be capped, there is potential for more interest than other GIC products. Cashable GIC Cashable GICs offer clients the opportunity to take out their money at any time but do have a lower interest rate in comparison to Fixed-rate GICs. Foreign Dividends Foreign dividends are classified as interest and are taxed at his marginal tax rate. Only Canadian dividends qualify for the dividend tax credit. The dividend tax credit makes Canadian dividends more tax-efficient than foreign dividends. Annuity Advantages Some advantages of annuities include: No worry about outliving one's money when a life annuity or joint and last survivor annuity is purchased. I If the annuity is prescribed, less tax may be due in the early years of payment. Only an annuity is guaranteed for life and can manage longevity risk. Canadian Investor Protection Fund (CIPF) For stock investors, the CIPF (the Canadian Investor Protection Fund) provides investor protection in the case of dealer insolvency. In the case of dealer insolvency (but not market losses) The Canadian Investor Protection Fund (CIPF) and the Investor Protection Corporation (IPC) of the Mutual Fund Dealers Association (MFDA) insure MFDA members. The maximum amount of coverage is $1 million for each general account. Exchange Traded Fund (ETF) Exchange-Traded Funds; are highly transparent are professionally managed have no-load fees allow for commodity investing by tracking an index are convenient to buy and sell Return of Bond Factors A bond issuer pledges to repay the face amount of the bond at maturity and to make interim interest payments to the investor. There are many factors that affect the return of a bond. They include: Interest (coupon) rate; Maturity date; Credit quality; and Price. The face amount is not a factor that affects the return of the bond. Bond Interest Interest from a bond is usually paid semi-annually or two times a year. Indexed Annuities The indexed annuity has a payment amount that increases based on inflation over the contract term and is therefore unknown at the time of purchase. Despite the total future payout for an indexed annuity being unknown, they are attractive for investors: annuitants have a known minimum guaranteed payout and the assurance that their payments will fully or partially keep pace with inflation. Future Value Formula FV = PV x (1 + interest rate)n Canadian Investment Funds Standards Committee (CIFSC) The Canadian Investment Funds Standards Committee is responsible for classifying investments. It's five asset classes are: Cash Fixed income Equity Commodity Other.