What a loaded question and clearly it has to be answered with a certain amount of tact. For instance, a good investment might mean something that doubles in the next 60 days, only to tank 30 days following that.

Or, it might mean a slow boil of 8 to 10 percent returns per year, but not very liquid incase they need cash.

But what I think they mean is something that is safe, that grows at a reasonable rate of return, and �.has no downside. As well, they usually mean that the investment has tax preferential treatment. Actually, no one ever asks for this, but it comes up at tax time when you start counting interest income along with personal income (ouch!). This article will address those types of investments.

So, let�s break this down. What you want is healthy returns with no downside. Sort of having your cake and eating it to? Is that correct.

There are numerous investments that provide guarantees. Guaranteed Investment Certificates come to mind. They are liquid (so they can be cashed quickly) and provide interest rates of return. The downside is that there is no upside. Interest rates are dismal at best and provide growth that barely keeps pace with inflation.

No � what you want is some upside.

Well, the best one I�ve seen recently is the Managed Futures Notes offered through the Wheat Board.

You might be asking yourself, what are managed futures. And should you be getting into them. Another loaded question.

Managed Futures is the investing in futures contracts by professional traders who specialize in the commodities and futures markets as buyers or sellers of real assets such as gold, silver, grain, corn, crude oil, natural gas as well as financial instruments and currencies. Institutional investors, such as pension funds, have been investing in managed futures for more than two decades to help diversify their portfolios - and reduce risk. Through CWB Managed Futures Notes, individual investors can take advantage of this same upside potential with AAA-rated Principal Protection. In other words, the principal is 100 % guaranteed. As well, on the new issues, there is a guaranteed minimum yield of 3 percent over the lifetime of the investment

As to how this investment performs, Managed Futures have traditionally produced around a 13 % rate of return. This is based on the past 24 years of data collected. As well, they provide true diversification in that they are independent of stocks and bonds. In fact, they perform rather well in bear markets, thus providing investors with true diversification.

There are also some tax ramifications of these investments, especially when they are held outside of an RRSP. As non-registered investments, they have a maturity date of 7 years 11 months (let�s call 8 years to keep things simple). During this time, the investment does not produce any interest or dividends � strictly capital gains. So, while you hold the investment, there will be no tax. However, when it matures (8 years), you will pay capital gains tax. This is the best tax to pay because only 50 % of the gain is taxable (unlike interest tax which is 100 % taxable).

So, what do we have here?

1) Guaranteed Principal with a 3 % guaranteed lifetime (8 year return) backed by the Government of Canada (Wheat Board) with a AAA Standard and Poors Rating.
2) Diversification of your portfolio
(their not bonds or stocks) 3) Potential returns of 13 %
4) Tax Preferred investment with deferred taxes for 8 years followed by the best tax of all�Capital gains.

OK � so your still skeptical � what else do we have offer. How about�Real Return Bonds?

So...Why hold Real Return bonds?

1) Inflation Protection: Inflation is the biggest enemy of fixed income investments and real return bonds are the ONLY true hedge against this risk. Other investments such as gold or real estate have traditionally acted as an inflation hedge, but none are directly tied to the inflation rate as RRBs are. RRSP investors in particular should be very keen on protecting the purchasing power of their retirement money from the ravages of inflation. In fact, if you read the paper yesterday, you will see that inflation is increasing significantly in the US, driving the price of gold up. But it�s not just gold that is effected by inflation increases, it is the value of a real return bond. If inflation increases, the Real Rate of Return decreases, and the Real Return Bond increases in value. If you look at the 1 year returns on RRB�s they are equal to about 14 percent (TD Real Return Bond Fund). This clearly is equivalent to equity type returns. Provides equity type of returns the hands of RRBs.

2) Security � the Bonds owned in a RRB fund are government bonds. They usually have AAA Standard and Poor ratings and are backed by the governments who tax us when they need money.

3) Correlation: Real Return bonds should be considered a separate asset class and as such allow for enhanced diversification and portfolio optimization.

The bottom line is, you may see equity type returns on RRB\\\\'s with some degree of safety of capital.

OK � so there are two �good� investments. Let�s kill this article with 2 more examples for you to consider. How about�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

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 %.

Enough said. Here�s the deal. You should chat with your advisor about a �good investment�

One more thought�We�ve been bugging you about Critical Illness insurance and the pending premium increases. All of it has come true in that rates have increased by 30 percent for the coverage�s. Canada Life, one of our preferred suppliers, has increased their rates effective November 15th. However, if you purchase CI before the end of the year, you can obtain them at the pre November 15th rates. Don�t hesitate � this important product is only going to get more expensive.

Don\\\\'t miss our next issue where we will be talking about Year End Tax Planning.