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What do you think of RRIFs administered by Placements Québec?
In retirement, with a registered retirement income fund (RRIF), you will seek capital protection, a guaranteed and predictable minimum income that allows you to maintain your standard of living, liquidity and low management fees.
If you have additional savings outside of tax-advantaged accounts and you can afford to diversify, you will fiscally favor interest-earning investments within the RRIF, because it is otherwise fully taxable, whereas the Dividend and capital gain benefit from advantageous tax treatment. But here, this arbitration is subject to the play of the returns offered.
Épargne Placements Québec meets all of these criteria. The institution offers a range of government-guaranteed savings products without management or administration fees. However, its agents are not authorized to give financial advice, but to obtain it, a saver can use the services of a sales agent authorized by the institution.
What remains is the investment vehicle constituting the annuity. When it comes to guaranteed capital and returns, the choice can oscillate, roughly speaking, between high-interest savings accounts, guaranteed investment certificates and segregated funds.
We can also rely on good quality government bonds. In this aspect, Placements Québec offers more than competitive rates. Its progressive rate bond, which gives access to capital each year on the anniversary date, offered 4.8% the first year as of March 14 and an average annual rate of 3.78% over ten years. For its part (and still as of March 14), the annual yield of the fixed rate bond oscillated between 4.8% for a term of one year and a low of 3.75% for a maturity of five and six years , compared to 4% for the ten-year maturity. The rate on the Flexi-Plus product, at 4.25%, varies depending on the market, but this account allows access to the capital at any time and the interest is compounded monthly. As for the stock market bond, the maximum return linked to the vagaries of a stock market index composed of Quebec securities is capped at 60% at the end of five years and at 150% at the end of ten years.
Finally, segregated funds, taking the form of a mutual investment fund to which insurance is attached, can offer the prospect of a higher potential return before fees, but may vary depending on the fund chosen. The capital is generally guaranteed at 75% upon death or maturity. The protection will normally fall in the event of early exit. But the deadline may be distant and the level of management fees should be kept in mind. And they will increase if the capital guarantee is higher and/or if there is crystallization of gains during the accumulation phase.