Types of Accounts

Once you have determined your investment goals and level of involvement, the next step is to optimize registered and non-registered accounts for your overall financial strategy.

EACH ACCOUNT HAS ITS BENEFITS

Each registered account has its own fiscal advantages: tax deferral, tax-free income and capital gains, education subsidies are some examples. These accounts have limitations on withdrawals and deposits that are determined by the federal and provincial governments. In the case of non-registered accounts, only the annual value of realized income (interest and capital gains) in those accounts must be reported in your tax return. These therefore allow for more freedom as to amounts deposited or withdrawn, and in the timing of these transactions.

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REGISTERED ACCOUNTS

Retirement Planning

Various plans are offered in order to provide a retirement capital by delaying income tax depending on whether you have a retirement plan established by your employer.

Learn more about the RRSP, RRIF, LIRA and LIF
  • RRSP
    A Registered Retirement Savings Plan (RRSP) allows you to grow your assets tax-free using various investments (see our investment products). The amounts invested within the plan are a tax deduction from your taxable income at your highest marginal tax rate. Your reported income is therefore decreased, resulting in tax savings. Taxes will be applied to funds withdrawn from an RRSP, normally at the time of retirement. During this period in life, income is often lower and so a lower tax rate applies. Under certain conditions, the amounts may be withdrawn before retirement. The plan ends on December 31 of the year you reach the age of 71, at wich time your RRSP rose into a RRIF (see below).
  • RRIF
    A Registered Retirement Income Fund (RRIF) can be used when an RRSP ends. RRSP capital is then transferred to a RRIF. Your investments will continue to grow tax-free, but you must make a government mandated minimum withdrawal each year. You can of course withdraw sums greater than the minimum requirement since the goal of this product is to provide retirement income. These withdrawals are considered taxable income.

  • LIRA
    A Locked-in Retirement Account (LIRA) receives funds from a supplemental pension plan which is generally established by an employer. The plan allows you to delay the tax on investment earnings until withdrawal. These amounts may be withdrawn at retirement. You must then transfer these to a Life Income Fund (LIF) or purchase a life annuity from an insurer.

  • LIF
    A Life Income Fund (LIF) allows you to delay the tax on investment income where the amounts invested normally come from a supplemental pension plan or LIRA. At the time of retirement, a minimum amount is withdrawn each year and the maximum withdrawal is capped. Withdrawals are considered taxable income.

 

Project Planning

Whether to fund your children’s or your own education, to save for a house, a car or to take a trip, there are plans that allow you to grow your investments tax-free while providing the flexibility to utilize your capital as needed. 

Learn more about the TFSA, RESP and SSP
  • TFSA
    A Tax-Free Savings Account (TFSA) generates investment income that is not taxable. Each year, a maximum contribution can be made. Unused annual contributions accumulate and can be carried over to future years. The amounts can be withdrawn at anytime without tax consequences.
  • RESP
    A Registered Education Savings Plan (RESP) shelters investments, saved from post-secondary education, from taxes. Financial gains are not recognized in the RESP holder’s income until they are withdrawn. However, these amounts are taxable for the person enrolled in a postsecondary program who receives these funds. Government education grants may be deposited in this plan.

  • SSP
    The Stock Savings Plan (SSP) allows Quebecers to deduct from their taxable income the amount invested in common shares or investment fund securities issued by some small and medium Quebec businesses. Investors must hold these shares on December 31st for at least three consecutive years

Your IAS Investment Advisor is available to guide you through our variety of products and services. They take into account your specific situation and recommend what best suits your needs and investment objectives.

Contact an Investment Advisor

 

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NON-REGISTERED ACCOUNTS

IAS offers brokerage accounts for the various types of investment strategies you choose to adopt.

Cash Account

For the client who plans to settle each transaction in full.

Margin Accounts

These accounts are for sophisticated investors and can amplify the impact of an investment’s value through leverage. These accounts are available in three forms: margin account, options account and short selling account.

Learn more about margin accounts
  • Margin Account
    For the client who intends to borrow funds to be secured by assets that they plan to buy or already hold in their account.

  • Options Account
    Margin account in which one can trade options.

  • Short Sale Account
    Margin account in which you can, under certain conditions, sell securities you do not own.

Caution: In these types of accounts, the value of the margin granted is guaranteed by the market value of securities used as collateral. As this value fluctuates, so will the available loan value. This can lead to margin calls; requirements for additional funds to be deposited in the account.

 

Delivery Against Payment Account

IAS will execute a trade on behalf of a client, but payment is settled by another financial institution, who also performs safekeeping for the securities.

It is common for a financial strategy to use US currency.

To transact in US investment products without delay or foreign exchange costs, IAS allows you to maintain non-registered accounts in US dollars.

Other Services

IAS provides equity loans to carry out certain investments. It is also possible to transfer investment income to other institutions.

  • RRSP Loan
    This service allows you to borrow money to contribute to an RRSP or to take advantage of unused contribution room.
  • Automatic Income Transfer
    This service allows you to transfer dividends and interest from your investments to a bank account at any financial institution.

 

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INVESTMENT PRODUCTS

A brief description of the main investment products offered by IAS is presented below by asset class. Note that this information does not consist of recommendations but is rather a brief summary of products available at IAS. For more information, please contact your Investment Advisor or Portfolio Manager.

HOW TO CHOOSE

In addition to considering whether the risk and expected rate of return on investment of a product match your risk tolerance and  investment objectives, consider the terms of fund availability (liquidity), management costs associated with transactions and taxation on the type of income generated by the product. All of these factors will influence your investment strategy.

Contact an Investment Advisor

 

Liquid Low-Risk Products

A liquid product can easily be converted to cash. This category of assets includes debt securities whose investments are low risk. By investing in these securities, you lend your money to the issuer of the security; a government or a financial institution.

Learn more about liquid low-risk products
  • Treasury Bonds
    Loans sold in large denominations (eg. $1,000 increments) with a maturity of less than a year and issued by the provincial or federal government. At maturity, the income is the difference between the predetermined amount the issuer has agreed to repay (the nominal value, based on the loan amount) and the original price paid for the bond. The loan can be repaid before its maturity but the yield will be lower.

  • Savings Bonds
    This loan is granted to the federal government or those of some provinces. It is guaranteed by the state's taxing power. The loan period is one year or longer and income is generated from interest. The interest rate may be fixed and guaranteed each year until maturity or kept at a minimum which increases depending on the economic situation. Some bonds may be redeemed at any time or at fixed periods.

  • GIC
    Guaranteed Investment Certificates (GICs) are issued by a financial institution. The deposit time ranges from 30 days to 10 years. Income is usually generated in the form of fixed interest whose performance may be linked, in some cases, on a financial index. Most GICs must be kept throughout their life or an early redemption fee will apply.

  • Money Market Fund
    Mutual fund made up of short-term debt securities issued by governments, financial institutions and companies with good credit ratings. The duration of the loans allocated is less than a year. These securities are usually issued at a fixed price per unit. The income generated is interest. The profitability of the fund varies depending on the investments within it.

 

Fixed Income Securities

Like liquid products, fixed income securities are debt securities. However, they have a slightly higher risk because the loan granted to a government or company has a longer duration. In return, the expected return is higher.

Learn more about fixed income securities
  • Bonds
    These securities are issued by governments and public and private companies. The duration of the loan varies between one and 30 years. It is guaranteed by the state's taxing power or by specific assets of the company issuing the bonds. Income is generated in the form of interest payments at a fixed rate determined at issuance. In the event of dissolution of the issuing company, bonds holders are entitled to a portion of the assets after other creditors. Bonds are traded on the over-the-counter market (between brokers) and their ease of resale depends on the financial condition of the issuer.

  • Debentures
    Debentures are issued by companies and function in the same manner as bonds. However, in the case of debentures, the loan granted is not secured by specific assets but the credit standing of the issuer.

  • Strip Bonds
    In the case of strip bonds, the duration of the loan granted varies between 18 months and 30 years. There are no periodic interest payments so income is deferred. At maturity, the income is the difference between the predetermined amount the issuer has agreed to repay (the nominal value, based on the loan amount) and the original price paid for the bond. Interest coupons that are attached to a bond can be sold as separate securities, hence the term “strip”.

 

Equities

Equities, also called shares or stocks, give the purchaser an ownership interest in a company proportional to the number of shares purchased. If the number of shares held by an investor is high, they can influence or even control the issuer. Compared to liquid and fixed income securities, the assumed risk is higher, but so is the expected return. The income generated is in the form of a distribution of company profits to shareholders (dividends) or a capital gain/loss if the shares gain/lose value in the stock market at the time of the sale.

Learn more about equities
  • Common Shares
    These shares are issued by companies and give the holder an interest in the property of the company through a right to vote, a right to receive dividends and rights in case of company liquidation. These securities have no maturity and if traded in a recognized stock exchange tend to be very liquid.

  • Flow-Through Shares
    These securities are specific common shares issued by companies in the exploration of oil, gas and mining. They enable shareholders to obtain certain tax deductions. Following the purchase, there is a minimum holding period. As this investment is related to prospecting companies, the level of risk associated with this product is very high.

  • Preferred Shares
    These shares are issued by companies and give their holders the right to fixed dividends. They can be converted into common shares based on a predetermined price. These shares tend to be liquid because they have no maturity date and are traded on a stock exchange.

 

Investment Funds

Investment funds may hold multiple asset classes. Investors pool their money to purchase securities of such funds and thus receive an investment portfolio at a lower cost while reducing risk. If the fund is structured as a trust, securities issued are units while if the fund is established by a corporation, the issued securities are shares. The shares purchased correspond to the portion of each security in the fund and give the holder a right to a net asset value (price) of all securities of the fund in proportion to the shares held. Depending on the assets, the income will consist in varying degrees of dividends, interest or capital gains. The risk will therefore vary accordingly.

Learn more about investment funds
  • Mutual Funds
    A mutual fund is form of a collective investment. The portfolio of assets pooled by investors is managed on their behalf by a manager in accordance with stated investment strategy of the portfolio manager. Liquidity is generaly good because these securities have no maturity and can be redeemed from the fund.

  • ETFs
    An Exchange Traded Fund (ETF) usually holds the same selection of investments that is used to maintain a market index. Certain ETFs follow stock exchange indices, bond indices, commodities, etc. In this case, the portfolio manager does not seek to optimize the performance of the fund, but only to ensure that it mirrors its benchmark. Management fees are low. There are other types of ETFs such as leveraged ETFs which are highly speculative short-term investments that aim to double or triple the daily performance of a benchmark. Liquidity is high because these securities are publicly traded, but the risk is very high in the case of leveraged ETFs.

  • Income Trusts
    These securities are issued by a trust that holds the shares or assets of one or more companies. Unit holders receive a portion of the revenue generated by the companies in the trust. This product is therefore designed to regularly distribute income to investors. Trusts are not all publicly traded and no regulation governs the distribution of income among investors. Payments may be suspended or modified at the trust's discretion.

 

Other Investments

This asset category includes products that are more complex and sensitive to market fluctuations. As the associated risk may in some cases be high, these products are suitable for experienced investors or those with a good understanding of the product. In addition, investors should be comfortable with the possibility of financial losses. Under these risk conditions, the expected return of these products is higher than those of the more common products.

Learn more about other investments
  • Structured Notes
    These securities are typically issued by a financial institution. The duration of the loan usually ranges from a few years to 10 years. Notes may have protected or unprotected capital and are usually designed to have an amplified effect on the amount invested. Performance can fluctuate based on a reference portfolio that may be linked to one or more indices, commodities, currencies, funds, etc. Income generated is in the form of interest, income distribution or capital gain/loss following the sale of the note.

  • Options
    Options are derivatives used for speculative purposes and to manage the market risk of an underlying asset (a stock, index, commodity, etc.). Buying a call option gives you the right to buy an asset at a specified price for a specified period of time. Similarly, one can buy a put option which gives you the right to sell the underlying asset at a fixed price for a specified period of time. The holder of an option has the ability to sell it, exercise their right to buy or sell the underlying asset, or to let it expire. The income generated is from a capital gain/loss.

  • Rights and Warrants
    These products give shareholders the right to buy equities for a specified period of time directly from a company which issues additional shares at a predetermined price. These securities are generally traded on stock exchanges. In some cases, there may be resale restrictions.

  • New Issues
    Your Investment Advisor can inform you of securities issued by companies through public offerings.