Now that RRSP Season is almost over, many of my clients are looking for direction as to how to invest their monies going forward. Tech meltdowns, accounting fraud, and international events are clouding the investment horizon. And it's no secret that the S&P 500 lost 25 percent in the past 12 months. That's why clients are coming to me for advice as to how to protect their investments, yet at the same time be able to participate in recovering markets. In other words, they want to know if ‘ they can have their cake and eat it too?'

In a manner of speaking, ‘ Yes, you can!'

Here are several ways to participate in the stock market and not face any of the risk.

Equity Linked GIC's

These products guarantee to return the higher of the given interest rate or a percentage of the TSE 300 index. While they do not fully participate in the TSE 300 or S&P 500, they are guaranteed to never produce a negative return . Older individuals like them because they are used to investing in GIC's and are comfortable with the concept.

Segregated Funds

These look and smell like mutual funds, except for one very important concept…they are guaranteed to return up to 100% of your principal after a 10-year period. There is also a death benefit of 100 per cent of principal in the event you pass away. Often these funds have the ability to re-set the principal amount guaranteed. Therefore, if the fund returns 30 percent, a client can reset the value and have a 130% guarantee after 10 years of their original principal. Segregated funds also have the benefit of being creditor protected.

Blended Products

Recently, ManuLife developed a product called The Power of 2, a blend of GIC and segregated fund. Basically, the investor chooses the minimum return expected from the GIC, up to a max of 4.9%. The lower the percentage minimum return, let's say 2%, the higher the possible return if the market performs well. If the segregated fund has a negative return, then you are guaranteed a minimum 2% return. If it has a 10% return on the segregated fund, then you have a lower overall return, but still, nicely in excess of 2%.

Protected Growth Investments

The PGI's are relatively new to Canada but have a long, successful track record in Europe. Here is how they work…there is an annual Interest rate that is declared in advance for each year. The rate may be 0% in any given year and there will be no years where there will be a negative rate. The Annual interest rate will be set using the higher of the following two methods: i) a rate determined by the performance of a managed book of investments or (ii) a rate capped at a maximum of 4% and based on 50% of the previous year's one year return of the TSE 300 Total Return Index.

Take the mystery out if it all…to decide which product best suits you, speak with a seasoned financial advisor.