WhereDoesAllMyMoneyGo.comWhereDoesAllMyMoneyGo.comA Canadian Finance Blog written by an actual Stockbroker. Deals with insurance, investing, saving, education. 
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Security Swapping with your RRSP to Increase Tax Efficiency
2007-12-22 00:44:00 DON'T FORGET TO ENTER THE CONTEST TO WIN A FREE 7.1 MEGAPIXEL DIGITAL CAMERA - CONTEST CLOSES CHRISTMAS EVE, 2007 - CLICK HERE TO VISIT THE CONTEST PAGE!!! If you read the post on "trying to hold fixed income positions inside your RRSP", you'll know that there can be a tax advantage to doing so. And that's great to know when you are starting out and making new investments as you go along. But what about if you only recently found this out and have substantial holdings in both accounts already? There can be some tax implications or transaction fees incurred in trying to re-order everything around for the maximum tax efficiency.One way to help circumvent this is through the "swapping" of securities between your non-registered account and your RRSP account. Essentially you would SWAP interest bearing securities from your non-registered account to your RRSP, and the swap would be for tax advantaged securities from your RRSP to your non-registered account. (B... More About: Security , Efficiency , Retirement planning , With You
RIM up 16% after "After Hours" Trading
2007-12-21 03:41:00 DON'T FORGET TO ENTER THE CONTEST TO WIN A FREE 7.1 MEGAPIXEL DIGITAL CAMERA - CONTEST CLOSES CHRISTMAS EVE, 2007 - CLICK HERE TO VISIT THE CONTEST PAGE!!! There are a few things I wanted to point out about the title of this post. The first is that RIM (Research in Motion - the maker of the Blackberry) had a great day on the markets, the second is that most of the "pop" came after the markets closed.During regular market hours, RIM was up 4.67% on the NASDAQ stock exchange. Further, the company just released it's latest quarterly earnings "after-hours" - which means they waited until the regular markets closed. Once the information was assimilated by the markets - which they took to be better than what they had expected - after-hours trading really pushed up the stock price - another 11.19%. It reached a high of $120.10 USD before settling at just under $119 USD.The earnings basically said that RIM's profit for the 3rd quarter of this fiscal year w... More About: General , Trading , Hours
Deferring your RRSP Deductions to Higher Income Years
2007-12-20 20:06:00 DON'T FORGET TO ENTER THE CONTEST TO WIN A FREE 7.1 MEGAPIXEL DIGITAL CAMERA - CONTEST CLOSES CHRISTMAS EVE, 2007 - CLICK HERE TO VISIT THE CONTEST PAGE!!! It is important to note the difference between an RRSP "contribution" and an RRSP "deduction". You "make a contribution" by putting money (or securities) into your RRSP account. You "claim a deduction" when you want that contribution to reduce your earned income on a tax return (to reduce your tax bill and get a refund).You may already know that you can carry forward contribution room - so if you didn't maximize your RRSP in any given year, you have the ability to make up for it later. But a lesser known fact is that you can carry forward your RRSP deduction as well.The RRSP deduction is generated when you make an RRSP contribution, and the norm is to claim it in the same tax year you made the contribution. This is why you get your refund.If you make an RRSP contribution but don't use th... More About: Income , Years , Retirement planning , Higher
You can base the RRIF Withdrawal on a Lower Aged Spouse to Reduce the Minim
2007-12-20 08:49:00 DON'T FORGET TO ENTER THE CONTEST TO WIN A FREE 7.1 MEGAPIXEL DIGITAL CAMERA - CONTEST CLOSES CHRISTMAS EVE, 2007 - CLICK HERE TO VISIT THE CONTEST PAGE!!! If you find that you are in the enviable position of not NEEDING to make withdrawals from your RRIF account in order to cover your regular living expenses, there is a way to reduce the minimum required withdrawal each year. You can elect to have the withdrawal minimums based on the age of a lower aged spouse or common-law partner.If you recall from the previous post on RRIF withdrawal minimums, the younger you are, the less you have to take out.Let's say you are 71 and converting your RRSP to a RRIF account. You don't have to make any withdrawals in the year you make the conversion, but starting the following year, when you are 72, you will. If you have a RRIF of $500,000 you will need to make a withdrawal of $37,400 - all of which is taxable as income.BUT, if you happen to have a spouse who is 50, and you elected to bas... More About: Reduce , Lower , Retirement planning , Base , Withdrawal
RRIF Withdrawal Minimums
2007-12-20 05:11:00 DON'T FORGET TO ENTER THE CONTEST TO WIN A FREE 7.1 MEGAPIXEL DIGITAL CAMERA - CONTEST CLOSES CHRISTMAS EVE, 2007 - CLICK HERE TO VISIT THE CONTEST PAGE!!! A RRIF account (Registered Retirement Income Fund) is what most people turn their RRSP accounts into once they turn 71. The main difference between an RRSP and a RRIF is that you can only withdraw funds from a RRIF account - you can no longer make contributions. While you are not required to mature your RRSP until the year you turn 71, the many people who choose the option of maturing their RRSP into a RRIF will make the conversion before this time (i.e. if they retire earlier than that). But regardless of what age you hold a RRIF account at, you are required to withdraw a minimum amount each year known as the prescribed minimum withdrawal amount. Any RRIF withdrawals are fully taxable as income in the year you receive them (just like an RRSP withdrawal).The methods for determining how much you need to take out is shown below: I... More About: Retirement planning , Withdrawal
Contributing Investments (as opposed to cash) to your RRSP
2007-12-20 02:36:00 DON'T FORGET TO ENTER THE CONTEST TO WIN A FREE 7.1 MEGAPIXEL DIGITAL CAMERA - CONTEST CLOSES CHRISTMAS EVE, 2007 - CLICK HERE TO VISIT THE CONTEST PAGE!!! While the norm is to deposit money into an RRSP and then purchase the investments once the money has been deposited, it is also possible to contribute to your RRSP in the form of already-held investments. This in known as an "in-kind" contribution. (Think of it as shifting your investments from one account to another without having to sell them.) If the source of the "in-kind" contribution is NOT from another RRSP account that you own, then you can use this contribution as your RRSP contribution for the year, just like the normal cash contributions. For example, you can contribute stocks, bonds, mutual funds, GIC's, etc. directly into your RRSP and the Fair Market Value (FMV) of those securities (as of the previous day's close from the date of the transaction) will count as your RRSP contribution... More About: Cash , Investments , Retirement planning
You Don't Have to Take Your RRSP Loan in February
2007-12-19 08:21:00 DON'T FORGET TO ENTER THE CONTEST TO WIN A FREE 7.1 MEGAPIXEL DIGITAL CAMERA - CONTEST CLOSES CHRISTMAS EVE, 2007 - CLICK HERE TO VISIT THE CONTEST PAGE!!! If you happen to be one of the many Canadians who take out an annual RRSP loan every year right before the deadline in order to make your contribution, AND you happen to be a higher risk-tolerant investor, here are a couple of ideas for you to consider:GET AN RRSP LOAN WHEN THE MARKET HAS A CORRECTION If you are able (i.e. have paid off your previous RRSP loan, or have the ability to take on another one), then there is no law that states you have to wait until February to get an RRSP loan. The reason this might be of interest is if you believe that you can take advantage of "dips" in the market (kinda like the "dip" we're having now!). If the market goes up between now and the RRSP deadline, it would be to your advantage to get your loan NOW as your cost base will be lower.BUT... Unfortunately... More About: Loan , Retirement planning , Lending
WIN A FREE 7.1 MEGAPIXEL CANON DIGITAL CAMERA!
2007-12-17 20:44:00 WIN A 7.1 MegaPixel Canon Digital Camera ! If you are a reader of The Million Dollar Journey, you will know that I was the grand prize winner of the contest that was just held there. The prize? A Canon a570 IS Digital Camera Package complete with Lowepro Rezo 50 Carrying Case AND a 1GB SD Card which is all valued at $220 and was graciously provided by Derek at RedFlagDeals.com.I HAVE DECIDED TO IN TURN GIVE THIS AWAY TO A READER AT WHEREDOESALLMYMONEYGO.COM! :)More about the Prize:The camera is a top line brand (Canon) digital camera featuring 7.1 Mega Pixel resolution, 4x Optical Zoom, a 2.5" LCD Screen, Movie Recording capabilities, Image Stabilization and more. Click on the picture of the camera to link to a site that has more detailed specifications... I have to thank Derek from RedFlagDeals.com for agreeing to provide this prize first to The Million Dollar Journey for the contest there, and also for agreeing to hold on to it until we find a NEW winner! :) HOW TO E... More About: General , Free
RRSP Maturity or Conversion Options
2007-12-16 10:05:00 You have up until December 31st of the year that you turn 71 to "mature" your RRSP. Upon maturity, you have 4 options to choose from:1. Do Nothing (or "forget to do something")This is bad. If you don't elect to convert your RRSP using one of the following three options, then the CRA deems you to have completely withdrawn all funds from your RRSP in the year you turn 71. This is bad because the entire value of your RRSP is now included as taxable income and you could be faced with a massive tax bill.2. Convert to a RRIFA RRIF is short for Registered Retirement Income Fund. It is very similar to an RRSP except you are no longer allowed to make contributions to it, only withdrawals. You can hold all the same investments as before - the only requirement is that you withdraw a minimum amount of funds every year (which are taxable as income). The CRA will let you know how much you have to take out as a minimum, but there is no maximum that you can withdraw with a regu... More About: Maturity , Options , Conversion
Productive Uses for Your RRSP Refund
2007-12-16 08:22:00 If you contribute to your RRSP on a regular basis and have a tax refund owing to you every year, what do you do with the money? Certainly you will hear the opinions of your friends, family and colleagues telling you to put it HERE or use it THERE - and you may be wondering what the right answer might be?Personally I'm of the belief that as long as you do something productive with it, you're on the right track. Nonetheless, let's look at the most popular options:1. Contribute more to your RRSPThis is productive because you are adding even more money to your retirement savings. Of course, if you maximize your RRSP's then this is not an option. (And GOOD FOR YOU by the way!)2. Make a lump sum payment to your MortgageThis is a very popular option, especially for those who don't really know if accelerating the mortgage or maximizing your RRSPs is the best use of your discretionary funds. Since any extra payments to your mortgage go directly to reducing the principal owing, you will ...
How to Get a 70%+ Return on Your Money
2007-12-16 07:33:00 This is just another idea you can use if you liked my series of posts on leveraging. I showed how you can mitigate some of the risk involved with leverages by capitalizing on the power of piggy-backing refunds. Specifically we looked at using the refund from the tax deductible interest from an investment loan (to a non-registered investment account), putting that into an RRSP to generate another refund and then using that refund to contribute to a second non-registered investment account.Here is another strategy that will give you an instant return of around 70% on your out of pocket contributions to your savings:1. Take out an interest only loan.2. The interest is tax deductible and generates a tax refund.3. The tax refund from the loan interest is contributed to your RRSP.4. The RRSP contribution generates another tax refund.5. The refund from the RRSP is contributed to an RESP for your child.6. The RESP contribution generates a Canada Education Savings Grant (CESG) of at least 20... More About: Money , Return
Why Wait for your RRSP Refund?
2007-12-16 02:55:00 We've seen that if you plan on saving for retirement by using an RRSP, you can really knock multiple years off your working life if you do something productive with the tax refund. That can be anything from paying down the mortgage, to saving to a non-registered investment account, plowing it right back to the RRSP (if you don't maximize your contributions), etc.No matter the case, if you have a tax refund that is owing to you IT DOESN'T EARN INTEREST while it's sitting with the government waiting for you to fill out your tax return. To counter that "problem", you could always fill out a form that tells the payroll department to withhold less income tax from each pay cheque. Now, your take-pay will be slightly higher per pay cheque and if you do your math right you will have neither a refund nor a balance owing once you file your taxes.EXAMPLEJohn lives in Ontario and earns $50,000 per year and contributes $500/month to his RRSP. His normal take-home pay is based on hi... More About: Retirement planning , Wait
Unused RRSP Contribution Room at Death
2007-12-15 20:53:00 What happens if you die with unused RRSP contribution room?Naturally you would be inclined to think that your legal representative would file an RRSP contribution for you for your final tax year, thereby reducing your terminal tax bill... But there is a slight problem with that. Your your legal representative cannot make RRSP contributions to your RRSP after the date of your death! It just isn't allowed by the CRA.What IS allowed, is for the legal representative to make a contribution to your spouse's Spousal RRSP up to the first 60 days of the year following the year of your death. This has the same effect on your terminal taxes. The only caveat is that you had the room prior to the year you died as NO RRSP CONTRIBUTION ROOM IS GENERATED BY INCOME YOU EARNED IN THE YEAR THAT YOU DIE. All I can say is "BOO to that!". Like this article? Subscribe to Email Updates or the RSS Feed and keep up to date. Psst... it's FREE! More About: Death , Room , Contribution , Retirement planning
The Two Types of RRSP Meltdown Strategies Part 3 of 3
2007-12-15 07:04:00 NOTE: I extended this series to three parts. Click Here for Part 2. In Part 2, we discussed a sample, complete meltdown. We found that it might be much too risky. Let's now look at some alternatives... WHAT ABOUT A TERM LOAN?This is complicated. If you were planning on withdrawing money from the non-registered account for living expenses - this strategy will flat out not work! Allow me to explain:Using a 10 year term loan for HALF the value of the RRSP (as opposed to an interest only loan and completely melting down the RRSP) requires us to point out a few items: With a term loan the amount of interest will be less than the RRSP withdrawal annually so there will be some tax owing. This is because the term loan payment is part interest and part principal. Since we did not use any "surplus cash flow" in the above scenario, it wouldn't be fair to just assume that our investor can make up the shortfall in this scenario caused by the tax on the RRSP withdrawals that are ... More About: Strategies , Part 3 , Types
The Two Types of RRSP Meltdown Strategies Part 2 of 3
2007-12-15 03:30:00 Continuing from Part 1, I mentioned that I would look more closely at leveraging a meltdown. I already stated that I think it would be pretty rare for someone to want to completely meltdown their RRSP and focus on offsetting the withdrawals with deductible interest since the risk involved in doing so would be fairly high, and the loan value enormous. From the calculations I made below (which don't even factor in variance of actual returns in the real world!) the risks in this strategy are too great for all but the most speculative investors.(SIDE NOTE: My post got so long that I'm deciding to increase the series to three parts - it was originally penned for two parts.) COMPLETE OFFSETLet's look at what would be involved in completely offsetting the RRSP withdrawals with interest on an investment loan. First we need to make a few assumptions:1. Our investor is 55, will retire at 65 and will live to 90.2. He has $350,000 in his RRSP.3. All his investments grow at 8%.4. His loa... More About: Strategies , Types , Retirement planning , Lending
Brand New Look for WhereDoesAllMyMoneyGo.com!
2007-12-14 09:42:00 Hi everyone and welcome to the new look for WhereDoesAllMyMoneyGo.com! I decided to make some changes and I think I'm about 90% done. The big change is that I've gone from 2 columns to 3 columns and moved 95% of the ads out to the sides - hopefully that makes for a more pleasant reading experience.If you guys have any suggestions for how else to improve the site, please feel free to let me know! :) Like this article? Subscribe to Email Updates or the RSS Feed and keep up to date. Psst... it's FREE! More About: General , Brand , New Look
The Two Types of RRSP Meltdown Strategies Part 1 of 3
2007-12-13 00:52:00 I've written before that there are some situations in which you would want to avoid saving too much to your RRSPs. In one way or another, the reason comes down to taxes. The most common reasons cited for monitoring the value of your RRSPs:1. Withdrawals are subject to your full marginal tax rate.2. Registered withdrawals add to your earned income.2. If your income is too high it may trigger clawback of your Old Age Security benefit.3. You are required to make minimum annual withdrawals from age 72 onwards even if you don't need the money.4. Non-Registered assets can be taxed much more preferentially (while living and at death).Because of these main reasons, strategies have been developed to shift assets from registered accounts to non-registered accounts - these are known as meltdown strategies. Before I continue however, don't forget that many people would be envious of your problem! :)There are actually two basic ways to melt down an RRSP. One involves simply withdrawing m... More About: Strategies , Part , Types , Retirement planning , Lending
The Two Types of RRSP Meltdown Strategies Part 1 of 2
2007-12-13 00:52:00 I've written before that there are some situations in which you would want to avoid saving too much to your RRSPs. In one way or another, the reason comes down to taxes. The most common reasons cited for monitoring the value of your RRSPs:1. Withdrawals are subject to your full marginal tax rate.2. Registered withdrawals add to your earned income.2. If your income is too high it may trigger clawback of your Old Age Security benefit.3. You are required to make minimum annual withdrawals from age 72 onwards even if you don't need the money.4. Non-Registered assets can be taxed much more preferentially (while living and at death).Because of these main reasons, strategies have been developed to shift assets from registered accounts to non-registered accounts - these are known as meltdown strategies. Before I continue however, don't forget that many people would be envious of your problem! :)There are actually two basic ways to melt down an RRSP. One involves simply withdrawing m... More About: Strategies , Part , Types , Retirement planning , Lending
What's the best time of the year to invest?
2007-12-11 03:45:00 According to Peter Lynch, it's not worth thinking about. Peter Lynch is another name commonly mentioned in the list of world's greatest investors and he was also known for commissioning his research department to do some interesting studies.One of them looked at the difference between making your annual contributions to your investment account at the absolute lowest point of the year versus the highest point of the year. This particular study covered 30 years between 1965 and 1995 and assumed you saved $1000/year to the S&P500.If you had picked the lowest point of the year your annual rate of return would have been 11.7% compounded.If you had picked the highest point of the year to make your annual contribution, or as Mr. Lynch puts it: you were the real Jackie Gleason of the world - then your compounded annual return would have been 10.6%.You can see that the difference isn't as significant as you would imagine! He also asked the research department to calculate the return f... More About: Time , Invest , Year
The Million Dollar Journey Contest! Win a Digital Camera!
2007-12-07 05:53:00 I have had the great opportunity to write some guest posts for The Million Dollar Journey - which is another Canadian personal finance blog. FrugalTrader, who is the author of that blog, is currently holding a great contest to celebrate his One Year Anniversary of running the blog.The grand prize is a Digital Camera , but there are 6 prizes to be won... and trust me, the odds are much better than entering the lottery. :) The Million Dollar Journey is a great site and if you haven't already checked it out, please do so - and while you are there you should sign yourself up for the contest - it's FREE to enter! What could be better than that?CLICK HERE TO VISIT THE CONTEST PAGE AT THE MILLION DOLLAR JOURNEY If you found this article of interest, please consider subscribing to my RSS Feed. If you want to learn more about what an RSS Feed is, click here.For special deals for readers of WhereDoesAllMyMoneyGo.com (that's you!), please visit the "Deals For Readers&qu... More About: Contest , General
The Preet Principle Calculator
2007-12-06 06:35:00 I'm providing a spreadsheet that allows you to play with some assumptions for the Preet Principle - this calculator is not perfect by any means, but it will allow you to examine how the Preet Principle might work for your own situation.It allows you to adjust:1. Monthly Savings Amount2. Timeframe of the Strategy3. Long Term Rate of Return on your Portfolio4. Long Term Interest Rates5. Your Marginal Tax RatePlease, please note: the calculator was literally whipped up without the intent of providing a throrough analysis - it was more to provide a general tool for comparing strategies and to see how various variables can affect the strategies.Further, it assumes that you liquidate all your investments on the last day of the time period specified and taxes all investments at the top tax rate for your province. It DOES take into account your marginal tax rate up to that time, but another fault is that it cannot tell when you drop a tax bracket.I'm sure you'll have fun with it, but und... More About: Calculator , Retirement planning , Lending
The Man Who Broke the Bank of England
2007-12-05 04:54:00 George Soros has an interesting life story. One of the things he is known for is being the man who broke the Bank of England when, with some colleagues, he shorted the British Pound to the tune of $10 Billion. (That means he was betting that the British Pound would go down.)He recorded a one day profit of $1 Billion.If that wasn't enough of a great story, consider this: The investment fund that he co-founded with Jim Rogers, The Quantum Fund, generated a 10 year return of 42.5% from 1970 to 1980. To put that into perspective, a one-time $10,000 investment would've turned into almost $350,000 in ten years.George Soros is commonly cited as being one of the world's greatest investors. He is now very much devoted to philanthropy and political activism - in fact he spent almost $24 million dollars trying to make sure George W. Bush was not re-elected for a second term.He is currently the 80th Richest Person in the World (2007). If you found this article of interest, please... More About: Bank of England
The Preet Principle: Leveraging to Invest the Right Way! Part 4 of 4
2007-12-03 17:34:00 Continuing from Part 1, Part 2 and Part 3 in this series we now actually come to what was named the "Preet Principle". The name actually doesn't make too much sense, it was more because my colleague wanted to come up with a name to describe this strategy similar to the "Smith Manoeuvre" or the "Singleton Shuffle". There really isn't any "principle" - except perhaps taking advantage of piggy-backing refunds... which will become clear as you keep reading.Nothing in the strategy is uniquely mine. I simply took existing strategies and put them all together, created a more formalized step-by-step process, and then ran it all through a probability calculator to quantify the risk-return of the strategy.The BackgroundThe strategy is not for everyone, which I think I've made clear in the previous parts to this series. It was originally developed for high tax-bracket investors as a means to both accelerate the growth of their net-worth through levera... More About: Invest , Retirement planning , Lending
The Preet Principle: Leveraging to Invest the Right Way! Part 3 of 4
2007-12-03 00:18:00 Continuing from Part 1 and Part 2 in this series, this part will deal with looking at why most leverages fail.Lack of Experience with Invest ingIt is a big No-No in my books to even consider leverage without having been actively investing for AT LEAST a few years. Even better would be for the investor to have actually experienced a full market cycle (or two!) before looking at leverages. This is simply because if you have not experienced the ugly side of the markets, you really can't prepare yourself for it. But even more importantly, if you HAVE been through a major correction or a bear market, then you'll have also noticed that the periods following the dark times are among the brightest times. It would certainly help psychologically to have witnessed the rebound so that when your leveraged investment goes south, you will not be so easily tempted to bail on your strategy (i.e. exactly at the wrong time).Leveraging at the Top of a MarketIf you ever pay attention to the business me... More About: Part 3 , Retirement planning , Lending
The Preet Principle: Leveraging to Invest the Right Way! Part 2 of 4
2007-12-02 07:54:00 Continuing from Part 1 where we discussed the basic concept of leveraging and why people can find it appealing, we continue with a few simple comparisons to explore the power of leveraging. These examples are similar to the ones provided by financial advisors - and you will see that they look very appealing. But remember, it won't be until Part 3 of this series that I really go into detail about why leverages can be a really bad idea - so remember to continue reading the series before making any conclusions of your own.A Simple ExampleLet's look at a simple 10 year scenario where we have made the following assumptions: Our investor has a marginal tax rate of 40%, he earns a rate of return of 9% on his investment portfolio and he has $1000/month to put away for his savings.If he were to put $1000/month into his investment account (non-registered), his savings and growth on his savings would total $194,965.63 at the end of the 10 years.If he were to take out a 10 year loan with loan... More About: Invest , Retirement planning , Lending
The Preet Principle - Leveraging to Invest the Right Way! Part 1 of 4
2007-11-30 23:06:00 I picked the title of this series with my tongue planted firmly in cheek. At my old firm, I created an analysis to look at a combination of financial strategies involving leverage that were designed to mitigate the risks involved with most leverages. One of the advisors decided that the strategy should be named "The Preet Principle" and actually referred to it as such - and I think still does! :)A word of caution before proceeding. Don't even think about implementing anything I write about (on this blog, but especially in this series) without first consulting your own professional advisor.And with that, let us begin...Certainly many people have heard the old adage "People get rich using Other People's Money". They are referring to borrowing money to make a lump sum investment since this can magnify your absolute gains. Unfortunately, most advisors will gloss over the fact that it can magnify your losses as well! I forget the actual statistic, but something like... More About: Part , Invest , Retirement planning , Lending
Making Regular Contributions to your RRSP instead of RRSP Loans
2007-11-30 02:41:00 Many people ask their RRSP issuer to take money directly from their bank accounts the day after they have their pay cheques deposited. On the other hand, there are droves of people who take out a loan every February to make their lump sum contribution before the deadline - only to have to make monthly payments on their RRSP loan until the following year.If you have the ability to get out of the rut of annual RRSP loans - there are a couple of advantages. BUT with our society being more disposed to financing everything as opposed to saving for everything, sometimes the only way to get people to save is to get the RRSP loan. Making a mortgage payment or car loan payment usually takes priority over savings since there are no immediate and potentially crippling consequences to not making a monthly savings contribution like there is with missing a loan payment.Opportunity Cost If you can commit to making your savings automatic, one immediate gain is that you won't have interest to ... More About: Loans , Regular , Retirement planning , Contributions
The RRSP Contribution Deadline
2007-11-29 02:50:00 If you would like to claim your RRSP contribution(s) for a given tax year, you need to make the contribution(s) before the first 60 days of the following year. So for example, if you wanted to ensure you could claim an RRSP contribution for the 2007 tax year, it must be in no later than February 29th, 2008. This is the RRSP Contribution Deadline that you will hear about in the media at the beginning of every year.February 29th represents the 60th day of 2008. (Note that 2008 is a leap year - normally the deadline will be March 1st in non-leap years.) If you wait until the 61st day or later to make your contribution, then you lose the ability to claim the contribution for the preceding tax year - the earliest you would be able to claim those contributions would be for that current tax year. Many people wait until the last minute to make a lump sum RRSP contribution, but more and more Canadians are spreading out their savings by making contributions on a monthly basis either on t... More About: Retirement planning
Are RRSP's the best way to save for retirement? Part 3 of 3
2007-11-27 22:38:00 Continuing from Part 1 and Part 2, it's looking like saving for retirement through RRSP's versus non-registered portfolio savings is almost neck and neck - albeit having made some fairly large assumptions.Namely, we assumed that Anna can afford to pay the tax bill on her non-registered portfolio up to age 65. This may not be the case if she held individual securities or mutual fund trust units as the interest income, dividend income and realized capital gains distributions could be in the tens of thousands of dollars per year at this point. We cannot just arbitrarily pull money out of her day to day cash flow to pay these costs in one scenario and not for the RRSP savings scenario as well.Unless... Anna had been investing in Mutual Fund Corporations. In today's day and age, the fund shelf of corporate class mutual funds offered by the larger mutual fund companies allows for a diversified portfolio all held within the corporate class structure. For example, a balanced po... More About: Retirement , Save , Part 3 , Retirement planning
Are RRSP's the best way to save for retirement? Part 2 of 3
More articles from this author:2007-11-27 19:46:00 From what we have seen from Part 1, it seems that RRSP's deserve some more attention than previously afforded. Not in so much as to promote them further, but rather to see if they are truly in your best interest. Our basic analysis is not yet complete though, so let's keep trucking on! :)First, let's recap the results from Part 1. We saw that by saving 10% to her RRSP account, Anna would have $43,700/year in retirement. By instead saving to her non-registered portfolio, she would be able to fund a $51,300/year retirement income. That is a SUBSTANTIAL difference.Let's now look at the effects of putting the tax refunds to good use in the next two cases.Case 3: Anna saves 10% to her RRSP, Uses tax refund to build up a Non-Registered portfolioJust to be clear, this means that Anna continues to save her 10% every year. In this case, she is depositing the funds to her RRSP account and using the resulting tax refunds to contribute to a non-registered portfolio which will also be used t... More About: Retirement , Save , Retirement planning , Tire 1, 2, 3, 4, 5, 6, 7 |
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