Edmonton Real Estate Blog

They say you can’t make up for lost time but that’s not necessarily the case with contributions to your Registered Retirement Savings Plan (RRSP). Canadians are allowed to carry forward unused RRSP contribution room until the age of 71. So, if you didn’t maximize your RRSP contributions in past years, you can still take advantage of the opportunity to invest more than your annual contribution limit this year, make up for shortfalls in past years and take advantage of a large tax deduction, all at the same time. Maximizing your RRSP contributions are one of the best strategies to build the retirement you deserve and dream of.

Feel free to contact me or visit my website for more information.

Douglas J. Bodtcher  
Investors Group Financial Services Inc.
780-448-1988 ext. 284
Douglas.Bodtcher@investorsgroup.com

Many Canadians are pleased to receive a tax refund each spring, but what if you had that money to spend each month when you really needed it and were able to contribute more to your annual RRSP contribution at the same time? The concept of Dollar Cost Averaging has been around for many years. Essentially, investors who practice this investment strategy make fixed dollar investments on a regular basis. If used for regular monthly RRSP investments, this strategy can translate into potentially better returns, increased ability to save and a boost in take-home pay.

Feel free to contact me or visit my website for more information.

They say you can’t make up for lost time but that’s not necessarily the case with contributions to your Registered Retirement Savings Plan (RRSP). Canadians are allowed to carry forward unused RRSP contribution room until the age of 71. So, if you didn’t maximize your RRSP contributions in past years, you can still take advantage of the opportunity to invest more than your annual contribution limit this year, make up for shortfalls in past years and take advantage of a large tax deduction, all at the same time. Maximizing your RRSP contributions is one of the best strategies to build the retirement you deserve and dream of.

Feel free to contact me or visit my website for more information.

For the most part, RRSP concepts and facts are easy to understand: You regularly contribute to RRSP-eligible investments, the accumulating investment amounts are tax-deductible and tax-sheltered until you make withdrawals in retirement, and you enjoy the considerable benefits of compound growth over the longer term. Those RRSP facts are plain and simple but here are a few lesser known facts that will help you get the most from your RRSP eligible investments.

The Home Buyer’s Plan allows you to borrow from investments held in your RRSP for the purchase of your first home. You and your spouse can each borrow up to $25,000 but you can only participate in the program once and you must repay investments held in your RRSP over the next fifteen years or you’ll pay tax on any amounts not repaid.

The Lifelong Learning Plan makes it possible for you to use funds held within your RRSP to pay for training or education. If you qualify, you can withdraw up to $10,000 in a calendar year with the total withdrawal amount capped at $20,000 over a maximum of four consecutive years. You must repay within ten years to avoid penalties.

If you cease to be a resident of Canada you can still make contributions to your RRSP eligible investments using only Canadian-source earned income to calculate your contribution limit. There is a 25% withholding tax for payments to non-residents from investments held within a RRSP or RRIF but you can transfer qualifying lump-sum pension benefits or retirement allowances directly into your RRSP eligible investments without paying the withholding tax. You can also transfer funds between investments held within RRSPs without incurring a tax penalty.

In the year you turn 71 you must wind up your RRSP and take the cash, purchase an annuity or transfer the money to RRIF eligible investments, from which you will be required to withdraw annual amounts based on your age. If you are not earning much income, it might be more advantageous to start making withdrawals from your investments held within a RRSP/RRIF prior to age 71 to smooth out your taxable income in later years. After age 71, you can no longer make contributions to RRSP eligible investments for yourself but if your spouse is under age 71, you can still make contributions on their behalf.

Knowing the facts about RRSPs and RRIFs and using the right strategies will help ensure you can realize all your retirement dreams. You can get the right RRSP (and all other financial) facts and strategies from your professional advisor.

This column, written and published by Investors Group Financial Services Inc. (in Québec – a Financial Services Firm), and Investors Group Securities Inc. (in Québec, a firm in Financial Planning) presents general information only and is not a solicitation to buy or sell any investments. Contact your own advisor for specific advice about your circumstances. For more information on this topic please contact your Investors Group Consultant.

Feel free to contact me or visit my website for more information.

Tax-Free Savings Accounts (TFSAs) are a nearly brand new and quite flexible investment vehicle; Registered Retirement Savings Plans (RRSPs) have been a vital tax-advantaged retirement savings opportunity for many years; and non-registered investments are an important component of virtually every financial plan. If you are currently weighing the advantages of each of these investment options as you restructure your investment portfolio to match your overall financial goals during this difficult economic climate, you need to know how each is taxed. So let’s compare the tax treatment rules for TFSAs, RRSPs and non-registered investments.

There are tax and income-building advantages and disadvantages to each of these investment options. You need to look at them in relation to your overall tax situation and financial objectives. Your professional advisor can help you make the right decisions for your unique situation.

Feel free to contact me or visit my website for more information.

Many Canadians wait until the RRSP deadline each year to make their annual contribution, but they may be leaving the possibility of increased investment returns on the table. There really is a tangible benefit to making RRSP contributions early. Investing annually on January 1 can make a significant difference but, if your budget won’t allow for that, talk to us about the value of monthly contributions.

Feel free to contact with questions or more information

Douglas J. Bodtcher                               
Investors Group Financial Services Inc.
780-448-1988 ext. 284

How to identify your best long-term alternative

Have you ever wondered whether it makes more sense to pay off your mortgage or to contribute to a Registered Retirement Savings Plan? Perhaps you’re expecting to receive some extra money from an inheritance or an employment bonus, and you’re not sure which route to take.

The truth is, there is no easy answer. There are many variables that must be taken into account. Concentrating on paying down a mortgage may be the best route for one person, while focusing on an RRSP may benefit another.

Here are some factors to consider:

• Your age. When you’re young, it is wise to make your RRSP a priority. The sooner you get money into a sheltered retirement plan, the longer it will grow on a tax-deferred basis. But don’t overlook the need to build home equity. It can give you a head start on the expenses of moving to a larger home as your family grows.
• Your income. The more you earn, the higher the rate of tax you’ll pay. That means you must earn more in before-tax dollars to make mortgage payments. If you’re a high income earner you may want to quickly reduce this expensive debt.
• Investment returns. Pay attention to the rate of investment returns you could reasonably expect to earn when you contribute to your RRSP. Astute investors could be further ahead by investing their money than paying down the mortgage. The benefits of investing are magnified by an RRSP, with tax-deferred growth within the plan and tax deductions on contributions.
• Your mortgage rate. If your mortgage rate is higher than your expected investment return on your RRSP, then paying down your mortgage may be prudent – especially if you expect borrowing costs to rise in the future. But if your mortgage rate is low, it may make more sense to contribute to an RRSP.
• Are you behind on your RRSP? If you have made less than your maximum annual RRSP contribution in the past, a lump sum could allow you to catch up. You are allowed to make up for unused contribution room that you’ve accumulated from past years – which can also generate a significant tax refund.
• Your pension plan. Those with generous workplace pension plans that provide for a secure retirement may be able to concentrate on a mortgage without giving up financial security in retirement. Of course, you can focus on both your RRSP and mortgage. For example, contribute to your RRSP and then apply the tax refund it generates towards a prepayment on your mortgage.

Sincerely,

Douglas J. Bodtcher                               
Investors Group Financial Services Inc.
780-448-1988 ext. 284