Market-linked guaranteed investments - FAQ

1. For whom are Stock Market-Indexed Guaranteed Investment products intended?
2. I already have a Stock Market-Indexed Guaranteed Investment deposit linked to the Canadian stock market index. Is it appropriate for me to also invest in Alternative Guaranteed Investments?
3. How can I monitor the return of my guaranteed investments?
4. Why is the return on my guaranteed investments considered interest income instead of capital gains?
5. How will the interest on my guaranteed investments be taxed?

For whom are Stock Market-Indexed Guaranteed Investment products intended?

Stock Market-Indexed Guaranteed Investment will be of special interest to investors who are attracted by the potential return of the stock market but who want a guaranteed investment.

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I already have a Stock Market-Indexed Guaranteed Investment deposit linked to the Canadian stock market index. Is it appropriate for me to also invest in Alternative Guaranteed Investments?

Yes, by virtue of the principle of diversification. Financial planners agree that investors should avoid putting all their eggs in one basket. Since Alternative Guaranteed Investments can provide positive returns even when the stock markets are not rising, this is a good investment for improving your portfolio's diversification.

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How can I monitor the return of my guaranteed investments?

An index table is updated on a regular basis on the Desjardins Web site. From the home page, click on "Rates returns and exchange rates", then on "Market-linked guaranteed investments", then on "Guaranteed investments" and select the product from the menu on the left.
You can also refer to the financial pages of your newspaper. Your account statement (paper or electronic) also provides information on the guaranteed investment products that you hold.

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Why is the return on my guaranteed investments considered interest income instead of capital gains?

You invested in a guaranteed investment that was, in fact, a term deposit issued by your caisse or your branch, so you did not invest directly in the markets. The underlying indexes just measure the return on your investment.

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How will the interest on my guaranteed investments be taxed?

If this investment is in your RRSP, the return on your guaranteed investment will not be taxed, as is the case for any other RRSP-eligible investment. The return on guaranteed investment that are not in your RRSP cannot be known until maturity or unless the return is frozen. Unlike traditional term savings where the annual interest is taxed each year, the interest on your guaranteed investment is taxed only in the year when the return is known.

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