When it comes to attaining financial independence and stability, consulting a financial advisor will get you far. After doing your research, you may have come across the term “segregated funds” and are now interested to know more about this type of financial investment. If you have not yet talked to a financial adviser, here are a few key facts to know about segregated funds before you do.

What Are Segregated Funds?

When people hear this term, they often confuse it with mutual funds. Although there are some similarities, they are not exactly the same. The main difference is that segregated funds are not traded on public exchange markets. This means that if you wanted to invest in a segregated fund, you would have to deal with an insurance company directly. This is also where these types of funds got their name. They are called “segregated funds” because there are, well, segregated.

Segregated funds are similar to mutual funds, but instead of investing in stocks, these funds invest in insurance contracts. These contracts are then made to appreciate over time by buying mutual funds and other underlying assets.

Segregated Funds vs Mutual Funds

Although these investment types may seem similar at first glance, they have distinct differences. One key distinction is that segregated funds will include a guarantee to protect the money that is invested. This guaranteed protection covers at least 75 percent of the investment. There are even some cases where 100 percent of the investment may be protected. This will allow an investor to gain back at least a portion of their initial investment even if the underlying fund that the segregated fund is based on suffers losses.

However, there are some downsides to a segregated fund as well. Most of the time, a segregated fund is much less flexible than other investment types. There also tend to be higher fees when a segregated fund is opened. An investor will also have to wait until the investment reaches its term before they can take advantage of the guarantee.

How to Invest in Segregated Funds

The first step is to select the funds you want to invest in. You may search for available options in databases or go directly to an insurance company to inquire. You will then need to choose your accounts and funds respectively. If you had gone to an insurance company, a financial advisor would then advise you on which accounts and funds show the most promise in terms of turning a profit. After that, you will be given a contract that you will need to read carefully before signing.

Note: Keep in mind that if you are a first-time investor, seeking advice from a financial advisor will be essential to ensure that you do not make any beginner mistakes that will lead to financial loss.


In this day and age, having investments is essential. Investments can help your wealth grow with minimal effort from you. Segregated funds are a great beginner investment because of the safety guarantee that comes with them. Now that you are equipped with the knowledge of what segregated funds are and how they may be beneficial to you, you might be interested in investing in one yourself.

If you are ready to invest, finding a reliable investment agent is a must. This is especially true if it is your first time to take out an investment like this. Financial advisors and investment agents will be the best people to assist you when it comes to finding the right type of investment to fit your lifestyle and budget.

Whether you want to take out a segregated fund or another type of investment, the financial advisers at Alberta Wealth Management can help you start investing! We offer a full range of products, including employee benefits, life insurance, disability insurance, critical illness, Guaranteed Investment Funds (GIF), RRSPs, TFSA, annuities, and much more. Our services include succession and estate planning. Come in for a consultation today and get on the road to your financial stability!