Judging from my inbox, a lot of people are blissfully unaware you don’t need money to make an RRSP contribution and score a tax refund. I wrote here yesterday about dithering Jenny and her dead-end GIC. When we shifted it into an RRSP, she lined up to get 30% of it back in cash, which could then go into a TFSA. It’s as close as we get to magic in this cold, depressing country full of ice and unrequited desire.
A contribution in kind is simple, effective and quick. It takes an asset you own which is taxable and makes it non-taxable, while the government pays you for doing so. The growth then happens with no tax consequences, until you collapse the RRSP at some point in the future. But if you do it in an intelligent fashion, that tax load can be minimal.
(One caution, of course. If you move a mutual fund or stock or ETF or anything into your RRSP which has risen since you bought it, a capital gain will be triggered. But fear not. Cap gain taxes are cheap since one-half of the gain is tax-free. For most people this will amount to 15% or the profit, while you get to keep 85%. The rest of life should be so fair.)
Well, it’s just a shame most people will make no RRSP contribution this year and sadder still that those who do will average a pathetic $3,200. This is an important little tool in your financial arsenal with some worthy applications. Remember you have until the third of March to put money in for a refund on 2013 taxes, and it can equal 18% of what you earned last year. And while I know on the Sexiness Scale RRSPs rank somewhere between cold sores and living in Saskatoon, here are six cool things to do with them.
1. Shift taxation within your life.
This is easy. During years when you are gainfully employed, contribute to an RRSP, deduct this amount from your taxable income, get a refund and invest that outside your plan. Then during those times of your life when you are fired, laid off, punted, outsourced, severed, displaced, rightsized or just general screwed by The Man, you can cash in the RRSP, live off the money it contains, and pay little if any tax while doing so. What you’ve done is build up your own emergency reserve, and at the same time shifted the tax burden from the years of employment to the period of freedom.
2. Split income with your spouse
Now, here’s an excellent use for your spouse. If you earn more than him or her, or your spouse plans on taking time off, or is older and due to retire sooner, or a babe still in school, then open a spousal plan. The law allows you to contribute into a plan for your spouse up to your own contribution limit. You get to deduct the funds from your own taxable income, but they become the property of the other person. After three years in there, the money can be accessed by your spouse (so choose carefully) and used for whatever, and is taxed at their rate – presumably lower than your. So, you have income-split. Just be careful no money is taken before the three years or it will be attributed back to you, and cause a giant, ugly domestic dispute.
3. Finance a kid
Speaking of a spousal plan, one of the best uses of RRSP money is to pay the household expenses during a mat leave. If a spousal plan is in place, your squeeze can cash it in (ensure each withdrawal is less than $5,000 to minimize the withholding tax), and use the money to replace lost income. Of course, to make this work efficiently, you will need to plan the pregnancy at least three years in advance with the mat leave commencing on January 1st. Piece of cake. Here’s a calendar.
4. Upgrade your skills.
Rules also permit you to raid your RRSP to go to school, or send your spouse there. The Lifelong Learning Plan allows $10,000 a year to be taken, to a max of twenty grand (or forty between two spouses). Then, after school’s done, you have 10 years to put the money back into your plan. If you don’t, it will be added to your taxable income annually. This sure beats paying a bank interest on a tuition loan. Plus, you can put money into your RSP, get a tax refund for doing so, then turn around and take it out for school.
5. Buy a house (dubious), and lever your downpayment (better).
Ditto for the Homebuyers’s Plan. Up to $50,000 can be taken from the RRSPs of you and your spouse for the purpose of buying your first home. Then you have 15 years to repay it, starting in the second year after the withdrawal. Don’t make the annual payments, and the bucks will be added to your income and taxed at your marginal rate. While buying a home is a bad idea right now in many cities, and while the HBP actually has no inherent benefit to it, it does allow you to lever a bit. For example, if you both took your $50,000 down payment and RRSP’d it, leaving it there for just 90 days, you might get a refund of $15,000 which can be used at closing to reduce the mortgage. But, knowing you, it’d go into a hot tub upgrade.
6. Generate a tax refund which you promise not to piss away in Aruba.
That should be obvious. Invest extra cash in an RRSP, get a refund cheque and put the money into investments inside your TFSA. This is called revenge. It tastes good.
Bonus thing to do with an RRSP: retire.
Yes, I know this is exactly why the thing was invented 60 years ago, and I’m quite aware the mama of all retirement crises is now just a few years away, since seven in ten people no longer have a viable company pension. But the TFSA is emerging for anyone under 35 as the retirement vehicle of choice – so long as you keep it fully funded each year, and invested for growth. Still, there is a role for RRSPs, since money can grow inside these suckers tax-free until you turn into a hideous wrinkly with glass ankles. Then you can bitch and moan about the tax you pay collapsing them.
At least it’s something to do.
161 comments ↓
Who has $$$$ left over to put into a RRSP?
Thanks for tips. We opened up several weeks ago an Resp for the kids. Will plan to do a few more things none of which include buying a home anytime soon. Good recovery to you.
or stuff assets somewhere and nowhere
The paper bubble “corporate services”
Cheyenne, Wyoming.
At a single address >2,000 companies are registered
..Treasury and state banking regulators say banks have flagged billions of dollars in suspicious transactions involving U.S. shell companies in recent years. On June 10, a federal judge in Oregon ordered a company registered there to pay $60 million for defrauding a Ukrainian government agency through sham transactions involving shell companies. The civil lawsuit described a network of U.S.-registered shells connected to fraud in Eastern Europe and Afghanistan.
http://www.cnbc.com/id/101358503
Monday Monday. First on Monday.
All great advise but you have to learn to live off less than paycheck to take advantage of these options.
However, in your twenties the mall is just too tempting vice for most to avoid. Especially when your friends and family living a lifestyle they can not afford.
It so hard to put of the pleasures of one’s youth…
Garth
People are not contributing because they are taxed to death in order to pay for $91,000 govt worker salaries and 1 million dollar each pensions.
And so they’re broke. It’s no secret.
”…….until you turn into a hideous wrinkly with glass ankles.”
OMG Garth, is that what your ankle replacement is going to be? Glass? Why not something like silver? Would last longer. It’s anti-bacterial, anti-fungal, anti-viral and anti-magnetic so it probably wouldn’t set off the alarm at the airport security. Plus, what a great way to store it. Beats the furnace room.
Garth,
You’re starting to sound like the teller at the local credit union
“Collapsing” is the key word here.
Just about describes what’s happening.
Probably time to listen to the Austrians.
You have lost your mind, get off the pain killers.
What’s with all the free advice, at leased put a bannor add here, so you can make some loot.
“Then you can bitch and moan about the tax you pay collapsing them.”
Funny, that’s my Pops.
“…until you turn into a hideous wrinkly with glass ankles.”
Funny, but hardly true. This winter has been particularly bad for fractures, and even many of the young and sexy, hip and urban metrosexuals from the lost generation have fallen victim…
I agree 100% Garth. A young person should contribute to a TFSA instead of an RRSP because they are most likely to start off in a lower tax bracket. When they are middle aged, and hopefully in their peak earning years, they should do RRSPs. Or both TFSA and RRSP if they can.
More details from that auction in mississauga:
http://www.torontolife.com/informer/toronto-real-estate/2014/01/27/sale-of-the-week-mississauga-mansion-auction/
One question Garth, and sorry if you’ve already covered it. Out of curiosity (I’m far from being a millionaire), what gives with using a fully funded RRSP to buy a home? Like, say I was a millionaire (I like the way that sounds) and I wanted to use $300 000 from my RRSP to purchase a home outright, paying the interest to me, not the bank. I think they’re called mortgage RRSPs.
So, anyways, are they a scam, or should the richies in TO and Van take advantage of them to lessen the mortgage blow? I heard that they are costly to set up?
It’s worth knowing, just in case I win the lotto at some point (my mother-in-law buys me tickets once a year at Christmas:-), or find a million on a sidewalk…
Yup… Something to do!
How are you feeling Garth?
I’m in my mid to late 40’s. Wish we had TFSA’s earlier. Better late than never. But thanks to you Grath for getting us TFSA’s. All hail Garth!
Important tidbit about income splitting using a spousal RRSP: the issuer will only let you withdraw $5000 annually at the lowest tax rate, even where that is in fact the proper rate. In other words, first 5K at 10%, 2nd 5K in same calendar year at 20%, 3rd 5K in same year at 30%, even if your spouse’s marginal rate for that year is less than 20 or 30%. They will rebate any excessive tax taken when you do your taxes the following year, but they scoop more than they should in the interim. The only way around this that I know of is to have spousal RRSPs with multiple institutions, which is a pain in the ass.
Ottawa y/y stats are in (if you believe them) – singles up 1%, towns up 4%dos down 6%. Beginning of the end?
http://creastats.crea.ca/otta/mls/mls05_median.htm
edit for above*
towns up 4%, condos down 6%
I think it’s unpatriotic to counsel citizens on how to avoid paying taxes.
Particularly, at a time when the government needs to balance the budget, in order to get re-elected.
Remember the war bonds.
People these days are so selfish.
Thank Garth for this post,
“specially ’cause you are learning to be precise in telling people what to do”
I’m making my game plan making a list from your blog.
Really appreciated.
Garth,
Though I agree with many of the points you make here. I think it’s important that couples planning on using these strategies as a mat leave payment plan should understand that other tax benefits may be offset. For example, the spousal dependant tax benefit. Perhaps you can explain what happens to this benefit for the breadwinner as the spouse on leave begins taking income from an RRSP?
It would be prudent to consult your accountant on these strategies beforehand.
Thanks,
John from Edmonton
Accountant? That’s funny. — Garth
”
Garth
People are not contributing because they are taxed to death in order to pay for $91,000 govt worker salaries and 1 million dollar each pensions.
And so they’re broke. It’s no secret.”
This is absolutely correct…we have a diseased system that will take extreme surgery to get the cancer off the taxpayers back…..The problem is that everyone knows this and yet the MP’s letter boxes are not overflowing. Everyone needs to email…tweet and write continuously in order to make this Canadian disease a political issue. But ….your math is off….it actually takes 2.4 million to finance a civil servants pension at 85% of salary. And hey….don’t forget about the hundreds of thousands of kids that can’t get their first job because the civil servants are contracting back into their positions …wink wink nod nod…. with union help….and collecting not only the full pension but collecting a second full paycheque that comes with another full set of benefits. Meanwhile the kids are dreaming about the minimum wages being lifted…when they should be setting their sites on the vampires that are sucking the blood out of the system by corrupting the labor market.
THE TRUTH ABOUT THE HARRY DENTS AND MARC FABERS OF THE WORLD
Since the micro-correction in the market that started last week, the names of Faber and Dent, two well know doom and gloomers, have shown up in the blog comments repeatedly.
Here is the deal on these guys. If you read their newsletters the front page will scream “end of world” but the back pages will still be full of good analysis on mainstream S&P 500 stocks.
What gives – how can they preach doom and gloom and then suggest stocks to buy?
BECAUSE they are in the business of selling NEWSLETTERS. To get on CNBC other MSM outlets they need to shout loader than everyone else. Their schtick is that the financial world is coming to an end. When the market ticks down a few hundred points who ya gonna call to get a good sound bite – Marc or Harry. Then Marc and Harry’s newletters get hundreds of thousands of dollars of free advertising.
BUT at the end of the day they still see good value in equities.
So the great unwashed masses get the bejezuz scared out of them by the MSM “end of world” headlines while the analysts at pension funds and wealth management firms cruise past the hyperbole and go to the back pages looking for stock ideas.
The Take Away – the doom and gloom could happen but the chances are so incredibly remote that you cannot bet your future on it. History has overwhelmingly shown that the market will rise over the long-term. So do not bet against it.
#16 Vancity D-Man,
I agree: All hail Garth!
So what can we do for him guys? It’s our turn. Anyone got Dorothy’s e-mail?
What is better in the long run? Put $$$ in a non-registered account (after maxing the TFSA contribution) or stash them in a RSP knowing you are required to take a certain amount out each year in retirement when converted to a RRIF and possibly at a higher tax rate than today.
5. Buy a house (dubious), and lever your downpayment (better).
OK, the coolest thing is that the Homebuyers’s Plan can be used more than once !!! As long you sold your home, waited 5 years between homes and paid off the HBP balance that you had . For some reason I always looked at HBP as a “first time HBP” – not true.
I haven’t worked in years due to a disablilty for which i receive no benefit.
Can i still say put 25k in the rrsp and get a 10 g refund check even though i haven’t worked in decades but do have some savings?
Thanks again.
If you have room, yes. — Garth
Why do you think the Cons implemented the new SNITCH line to ratta-tax-tat… on tax cheaters.
Turn in your neighbor folks.. good for the economy!!
Low Tax on RRSP?
Then during those times of your life when you are fired, laid off, punted, outsourced, severed, displaced, rightsized or just general screwed by The Man, you can cash in the RRSP, live off the money it contains, and pay little if any tax while doing so.
************************************
I dunno, you only pay zero tax up to the basic peronal deduction level of $11,138, which is squat to live on…
After that the marginal tax jums to 20% in Ontario and 25% in Alberta (due to flat provincial tax in Alberta. After about $52k total income the tax rises further to 30% range.
So basically you are going to face at least 20% tax on RRSP withdrawals except if you living on a grand a month.
My focus has been to grow the snot out of my RRSP, government will grab 40% of it anyhow (based on my planned income bracket) so I may as well make sure my 60% is as high as possible.
Consider 60% of one million is a lot more than 100% (no tax) of $200k.
#149 bentoverpayingtaxes on 01.27.14 at 1:40 pm
I’m getting quite the tour of the Lower Mainland.
My daughter lives in Poco. How about the Poco, Burnaby, Maple Ridge area. I know that Burnaby’s mayor is a dink.
Question:
I am 33 and had not until this year put in money into an RRSP.
The last few years my business has been making big bucks and the tax man fleeced me.
I have 70K of RRSP previously not used. Can I go OVER my 18% maximum by dipping into my not used previous contributions?
#20 Son of Ponzi
Good Lord. Please tell me that was tongue-in-cheek.
I’m trying to figure out whether to prioritize my RRSP or TFSA. I’m in my late 20s and will start earning in the top tax bracket this year. I’m thinking of maxing my TFSA while contributing the usual 10% of gross salary to my RRSP, but maybe it would be better to keep using my TFSA for my emergency fund only (invested in bond ETFs right now, not a popular choice here I know, but at least it’s not a GIC) and focus on my RRSP for the tax benefits.
Mark Ottawa y/y stat
yeah I believe them but why don’t they show number of sales? Ottawa is a government town so real estate will hold up here better than anywhere else. Yes there are a lot of layoffs but laying off 5% of the workforce means that 95% are not laid off. Also the 5% get buy-out packages
@Small Business yep
RE: #20 Son of Ponzi on 01.27.14 at 8:13 pm
I think it’s unpatriotic to counsel citizens on how to avoid paying taxes.
Particularly, at a time when the government needs to balance the budget, in order to get re-elected.
The lack of tax revenue lies squarely at the feet of the Harper Government. They are the ones who cut taxes in the first place and are constantly reminding us that they did so. To get re-elected…..
@Small Business
If you have your own CCPC, you should look into whether it’s better to pay yourself a salary to max out your RRSP, or pay yourself dividends and keep the remaining income within your company, and invest through it. Look up Jamie Golombek for his analysis on CIBC.
Is there a chance that the RRSPs could be raided at some point? Or the TSFAs?
One strange restriction: Why can’t one trade worldwide with their RRSP (for example I can’t buy Siemens directly on Frankfurt stock exchange)?
Garth,
Yesterday you told me to come back when I learn what is diversification.
Straight from Warren Buffett :
“Diversification is protection against ignorance, it makes little sense for those who know what they’re doing.”
Now look at his portfolio. — Garth
#5 – “All great advise but you have to learn to live off less than paycheck to take advantage of these options.”
Not that hard. Cdns, the dumb dumbs that they are, can easily live with less.. I am living testament.. Sold my overrated condo last spring, rented a lovely bungalow (for the same prove as my condo and maintenance fee, but I have a 1/2 to enjoy and lot more space and air), cut back on lots of silly little expenses (they add up… do i really need the movie channel for $20/month?), invested (albeit modestly) and saving as much as we can…
I look at my colleagues and see them buying brand new $45K minivans (same salary) and I have to bite my tongue b/c I want to tell them they are just dumb…
Want to know the easiest way to save a LOT of money? Keep driving your old car… as long as you can. Cars can easily last 15-20 years if you take care of them. That will save you thousands per year… but people want their shiny new cars, I guess…
A proposition, Mr. Turner…
Your advice since I began reading your blog has been invaluable. It has gotten me out of some investing mistakes before I lost my shirt, prevented others & made me take a long, hard look at what I do. I’m always learning from what you post here as well as what others contribute.
Your accident was unfortunate, painful & will curtail your physical activities for some time. As much as I’d love to know the gory details of your injury, surgery & subsequent recovery, it’s none of my business.
That being said & knowing that under your snarky, (at times), exterior lies a soft touch for critters I hereby commit to doing the following:
I will make a donation to our local animal shelter when you can report the following milestones:
You can walk 20 steps with ONE crutch or other assistive device.
You’re able to walk, (as slowly as needed), to the end of your driveway & back without help.
You can start the Harley & take off down the open road. Singing ‘Born to be Wild’ at the tops of your lungs is optional.
I’ve hauled out a jar & will make my first Garth Donation Fund deposit this evening & will do so every evening.
Incidentally, for those looking for non-monetary ways to help local critter shelters, they can always use old towels for bedding & bathing animals that come in.
Anybody willing to match me on the pledge?
Garth – what is the threshold for getting interested in a RRSP mortgage? 5% rates? 8%?
Money is cheap now, but the idea of financing your own mortgage and guaranteeing RRSP growth is appealing.
It’s less appealing when you understand the upfront costs. — Garth
#31 Eaglebay
That “Dink” has continued the practice of Burnaby legacy fund of several hundred million dollars from land sales (which the interest 37.5M 2013 is used for Capitol Projects.) Probably the Only Community in the lower Mainland that does this. Ergo that “dink ” keeps getting elected.
http://burnaby.ca/Assets/our+city+hall/financial+reports/2013+Provisional+Financial+Plan.pdf
“contribute to an RRSP, deduct this amount from your
taxable income, get a refund”
Garth – I am sure you covered this before. Better planning is to reduce the tax at source so you contribute with before tax dollars and dont get the refund.
39 Sheane – RRSP is raided when you or your surviving spouse dies.
#20 Son of Ponzi: “I think it’s unpatriotic to counsel citizens on how to avoid paying taxes.”
*****************
You’re kidding, right? LOL
If not, there is nothing illegal or amoral about paying the least amount of taxes due. To do otherwise is, in a word…stupid.
“I think it’s unpatriotic to counsel citizens on how to avoid paying taxes. Particularly, at a time when the government needs to balance the budget”
I think it’s unpatriotic that many people in this country expect me to fund their existence b/c they can’t support themselves… sorry man, there’s no way you can be poor in this country.. my relatives came from Europe with nothing and faced all kinds of discrimination from Anglos… they busted their asses off and expect nothing (and got nothing) from the govt. Today, those who are still alive don’t have a mortgage, plenty of cash and contributed into the system for decades… we don’t have a poverty issue in Canada, we have an entitlement issue.. People won’t get off their asses and lower themselves to work in a fast-food joint or Wal-Mart – they’d rather live off their parents largess and our generous social safety net…
My wife is a CPA.
She’s always maxed out her TFSA contributions.
Today she got a statement from CRA saying she over contributed in 2013 and owes 175 in taxes.
Maybe it’s not that simple after all.
If you put money in 18-year old child’s TFSA, that money is his/hers, right? Too bad to leave that contribution room that may not be used for a long time.
@Jan (#28)
The only way you can get 40% tax back is if you take the RRSP deduction in a year where your marginal tax rate is 40% (i.e. if you earned one more or less dollar, you would pay 40 cents more or less in tax).
On long-term disability, unless you’re on one of those gold-plated disability plans, it seems unlikely that your marginal tax rate would be 40%. In Ontario (for example), your taxable income in 2013 would have to be north of $108,000 ($83K + $25K in RRSP to knock off your tax) to get at least $10,000 back.
TRADE EUROPEAN STOCKS IN RRSP?
Sheane at 39 asked:
Why can’t one trade worldwide with their RRSP (for example I can’t buy Siemens directly on Frankfurt stock exchange)?
****************************************
Mostly because North Americans are snobs and figgure no would want to.
No legal restrictions on this.
But brokers find it expensive and a bother to deal with European exchanges and the Euro currency.
With a full service broker you can probably do it.
With a discount broker we get discount service.
TD Waterhouse I think offers a way to do it but maybe not for RRSP… it’s too much work for RRSP I guess…
Retro active min wage, delivery by the grand school mistress. Now class this is good for the economy, disagree with my down to the principles office, you can have a seat with Rob Ford.
So. 25 cents x 2000 hours a year x 4 years.
2000 k a head.
Nice….. Fen idiots…
Bye bye Ontario…..
Foreign Stocks
I would say there is plenty to choose from on Toronto and New York including many forign companies that trade on New York. Plus hundreds of ETFs.
No need to bother with individual stocks outside of that unless it’s just for the adventure of it.
When we get over about $10 million in our investments we can think about maybe buying individual stocks on Frankfurt and other world stock exchanges.
Question for blog dogs :
I worked half of 2013 in the US and half in Canada. So, dollar for dollar, I will be paying less provincial and federal taxes than I would normally pay just working in Canada. Question : should I wait a year before dumping my investments in my RRSP? Or my tax rate will simply be based on my total north american income for 2013? Thanks.
Transferring in kind is not understood by [email protected] I’ve tried doing it and explained it. But nope, was told I would have to sell it in NRSP account to get cash. Contribute cash to RRSP account then buy back the share from the RSP account.
Figures. — Garth
#42 TheCatFoodLady on 01.27.14 at 9:33 pm
No I’m not with you, animal shelters, nice and feel good right. do you not see those homeless people, the kids down town, 95 %of people that walk by them daily.
That’s the only charities I give too, it’s cash, no tax receipt.
And man you got hear there stories.
I might host a pink floyd cruse this summer, tunes cranked, booze abundant. After the crusre a zombie hunt, we shower these people with cash.
To bad schooling made you all think these unfortunate souls deserve what they get.
No one helps them.
Sad.
Great article on the TFSA vs RRSP:
http://www.theglobeandmail.com/globe-investor/personal-finance/the-wealthy-barber-explains-tfsa-or-rrsp/article1356709/?page=all
#39
One strange restriction: Why can’t one trade worldwide with their RRSP (for example I can’t buy Siemens directly on Frankfurt stock exchange)?
———————–
the Germans learned from the 2008 melt down.
No Grasshopper investors, unlike in the US and Canada.
But ….your math is off….it actually takes 2.4 million to finance a civil servants pension at 85% of salary.
I spent most of my working life as a civil servant, horrible jobs but in the end there was a pension that equates to about 45% after 23 years…Sure like to meet the mystery one at 85%. 60% is common after 30 years or more.
Champion AfcCfighter broke his leg kicking an opponent a while ago.
Diagnosed with “bird bones” light but brittle.
Cause lack of VITAMIN D and K2.
Peoples bones shouldn’t be breaking in falls on the sidewalk,ice or not.
Garth get your Vit D blood serum levels checked.
Why not something like silver?
Screw silver — Garth should get adamantium ankles.
#53 stedra – Of course, selling generates commissions for the bank. Most bank employees only know what the bank has taught them, which you may be surprised to learn, always makes the bank money. GIC anyone?
I want to belatedly thank Retired Boomer-WI for his great post #137 on 1/26. At a time in my life where I’m under pressure at a new job to relax my long standing principles of honesty and integrity this post came at exactly the right time. Thank-you Sir. One of the best posts I have read on this site. Here it is again.
——————————————————————
#122 Smoking Man
To an extent, I agree with you! As a guy who was in sales much of my life, it is THERE where you can “write your own ticket.” Also the son of two business owners, I have seen that side of the business world as well. Both are good, both have no real limit on your earnings, both require expertise in management, people skills a bs in BS if you know what I mean.
Where I disagree with you, is that to be really successful you do NOT screw people. You really do your utmost to help them succeed. When others succeed with your products you have a friend, and a steady income steam.
The most truly long term successful people I have ever met have the highest ethics, honesty, and integrity I have ever seen. Others might have been successful too, but the really outstanding ones have nothing but the BEST reputations, honestly earned!
sorry SM, but that is what I have seen in my life. Maybe I have lived in a bubble, but it is a dam nice bubble.
#47 Bob Rice –
”People won’t get off their asses and lower themselves to work in a fast-food joint or Wal-Mart – they’d rather live off their parents largess and our generous social safety net…”
You got that right Bob. It’s also in many cases the parents egos that prevent these future basement dwellers from working in a fast-food joint or Wal-Mart. Wouldn’t want their so called rich friends to see them there. Would not be good for the ego. Darn egos anyway, so difficult to manage.
#63 Calgary Car Guy
You are most welcome. Thanks for sharing.
Integrity is one thing you can never lose, you can only give it away.
#28 jan on 01.27.14 at 8:42 pm
“Can i still say put 25k in the rrsp and get a 10 g refund check even though i haven’t worked in decades but do have some savings?”
Jan, the amount of refund will depend on your tax rate. If you are very low income due to your disability and pay no taxes, then you wouldn’t get any refund. Is this right, Garth?
What’s going to happen with this made in ontario pension plan? How is this going to work? Can these liberals be stopped from implementing this?
#56 – Smoking Man:
Assume much? Not a good trait in a salesman or one who purports to be a people watcher. I don’t think that:
***To bad schooling made you all think these unfortunate souls deserve what they get.***
Like all walks of life, some ‘deserve’ where they find themselves & others have been kicked in the cojones by life & aren’t in a head space right now to get themselves out of it…
This is a specific pledge for a specific situation. Period.
#32 Small Business on 01.27.14 at 8:57 pm
Congrats on your business success.
Yes, you may contribute your yearly maximum RRSP amount for 2013 plus an additional amount up to the total of your previous years’ unused contribution room.
#34 Rebecca on 01.27.14 at 9:03 pm
Very smart at a young age. I would suggest maximizing your RRSP contributions and then put the tax refund into your TFSA. (Or else, use the tax refund for something fun.)
#63 Calgary Car Guy on 01.27.14 at 11:02 pm
You live in a bubble, when it comes down to it, you will do what it takes to survive.
The ones you think are noble, just darn good actors.
In real life, out side of here, I would win academy awards I’m a great ethical dude, here I’m me, fake name.
Sorry to burst your bubble.
Can anyone comment on a slightly different RRSP conversion strategy I read about recently? Instead of leaving the funds in as long as possible, retire earlier (say at 50) and live off some of the proceeds before there are any government benefits to trigger a clawback. This would be based on the assumptions that you’re not completely exhausting your plan and, more importantly, there’s TFSA money and seven-figure non-registered assets available that would ensure you never run out of cash. Any thoughts on this contrarian cash-out strategy?
#65 TheCatFoodLady on 01.27.14 at 11:20 pm
Like all walks of life, some
‘deserve’ where they find themselves.
………
Based on what, your pre
programed definition of good and evil.
That homeless person in the cold broke a rule. He deserves it.
That one in the cold broke no rules, he’s worth of saving.
I get it. Silly me
#14 Cici — “One question Garth, and sorry if you’ve already covered it. Out of curiosity (I’m far from being a millionaire), what gives with using a fully funded RRSP to buy a home?”
There isn’t much to it. The mortgage has to be insured no matter the LTV, and the bank that administers it will take on the order of a couple hundred $ in fees. The interest rate has to be “reasonable,” so if you want to py yourself a lot of interest you can write a fancy one with a lot of prepayment options and the like and charge yourself the posted rate, and if you want to pay yourself a little you can find a no-frills commercial mortgage and mimic the terms and rate of that.
#20 Son of Ponzi — “I think it’s unpatriotic to counsel citizens on how to avoid paying taxes.”
I think it’s unrighteous to have a tax code full of complexity such that a smart person, or one with good advice, can pay substantially less tax than one with about the same income with bad advice. Of course, politicians have been promising to simplify the tax code since I was wee, and it never comes to pass.
And why oh why, if the government gets tax info for all the income of 95% of Canadians, do we all have to buy tax programs and/or slave over it longhand to come up with numbers already in government computers? Couldn’t we just fill out deduction info on a government webserver and be done with it?
Be that as it may, taxation is currently a great game, and I need to spend a number of hours every year optimizing (minimizing) it for me and mine. So be it.
#61 DM in C — “Screw silver — Garth should get adamantium ankles.”
Nemesis hasn’t been posting much lately, so here goes… Adamantium? Ankles? Watch your step!
http://www.youtube.com/watch?v=27Tj-Xo_eqI
I wanna invest with Garth !
43 TOBB – that’s a good question. Now a common misconception is that the RRSP mortgage is supposed to get your RRSP a high rate. But its really the opposite – it is to get your mortgage a low rate. Here’s
why.
The mortgage is paid back with after tax income. You
want to minimize that. Now the mortgage doesnt earn you the mortgage rate you set. It earns you what the
market yields in whatever you re-invest the funds in.
Better to pay back at $1000 per mo in after tax to the
RRSP than $1200 AT. You would have to realize about
$300 before tax to make up the $200 AT difference.
Better to contribute the $300BT for a total of $1300.
Now if you have unsheltered investments,maybe you can sell them, dump it in the RRSP, use the RRSP to
pay off the old mortgage, then borrow to buy back the original investments. Now you have tax-deductible interest on an RRSP mortgage. CRA anyone??
Hey Smoking Man! I am doing what it takes to survive but that will never include being dishonest with people. Next month will be my 38th year in the car repair business as a service advisor and I can honestly say that I have never knowingly ripped off or misled anybody in all that time. I pay huge support payments to my ex and, due to the foolish greed of a new owner of the dealership I previously worked at, had to change jobs at 55. That guy took a champion dealership (top 40 in the world a few years back) and destroyed it in a few short years through sheer greed and stupidity. Now I’m struggling to rebuild my career and keep up the support payments. I live in a large RV on a rented wilderness property 30 miles outside of Calgary. No running water since the -40 temps in December. I shower at work. So don’t tell me I live in a bubble, ok? The biggest compliment one can ever get in life is when somebody says ” I trust you “. Customers are not adversaries. In fact a great many of the customers I have had over the years became some of the best friends I have ever had as well as allowing me to become one of the top paid service advisors in the country on numerous occasions.
Sorry Garth. He ticked me off.
Thanks Garth for your tips on wealth creation . I didn’t know myself about making A contribution in kind into your RRSP. No wonder the cons don’t like you you are giving inside knowledge of what the smart and wealthy do and giving this information to us…. the loser working class slaves. Thank you garth you are the robin hood of wealth knowledge and we are lucky to receive it.
For #31. I did read awhile ago that Burnaby was the richest (meaning the lowest debt) of all the municipalities in B.C. Two decades of a “dink” for mayor like that? I’m not from Burnaby but I gather the voters there can’t be too smart. I mean, can you imagine balancing your budget & spending tax dollars on frivolity like water mains & sewage upgrades, & good schools that bring in lots of Koreans. That will bring property prices down.
Garth,
Can you make the RRSP withdrawal to buy a home if its your first home in Canada, but you’ve owned homes in the US? (Just moved to BC a year ago)
#40 gogo
And of course you know what you’re doing.
Regardless, when it comes to Buffett, watch what he does, not what he says. Always. Otherwise you’re just another idiot repeating what he doesn’t understand.
Does anyone know of an tickers any TSX traded ETFs that track the Euro Stoxx 60 or some similar ETF of the top dividend payers in Europe?
Thanks
Beware if going the stay at home mom route after EI runs out. #3 won’t be as tax free as it may seem at first.
The non deductible basic amount for the income-less can be used by the spouse but not if 10k income is added by rrsp withdrawals.
For the maternity leave, #3 allows withdrawing at a Lower rate not zero since there will be taxable EI payouts
#65 retired Boomer – WI on 01.27.14 at 11:14 pm
and #63 Calgary Car Guy
…Integrity is one thing you can never lose, you can only give it away.
**************************************
Shakespeare’s Iago in Othello has this to say about personal honour:
…But he that filches from me my good name
Robs me of that which not enriches him,
And makes me poor indeed.
#41 Bob Rice on 01.27.14 at 9:32 pm
I look at my colleagues and see them buying brand new $45K minivans (same salary) and I have to bite my tongue b/c I want to tell them they are just dumb…
Want to know the easiest way to save a LOT of money? Keep driving your old car… as long as you can. Cars can easily last 15-20 years if you take care of them. That will save you thousands per year… but people want their shiny new cars, I guess…
……………………….
Agree. Many years ago I bought a used 2000 Accord , fully loaded, in great shape & still runs well with only 142,000 kms on it. We bargained for 3 hours & they finally gave in to our offer. Have only had to change the battery, complete exhaust system & will need some work at 160,000 kms. Have it rust checked every year. I’ll keep it as long as I can & then buy another used but smaller Honda or Toyota. You lose thousands of $$$ just driving a new one off the lot. BTW, it was my first automatic I’d ever owned. So easy to drive in town.
Brad J. Lamb discovers that banks aren’t interested in lending against refrigerator box sized condos, blames banks instead of the developer, obligatory comparison to NYC and Tokyo:
http://www.mortgagebrokernews.ca/news/banks-ignorance-opens-opportunity-for-monolines-176230.aspx
#79 Calgary Car Guy on 01.28.14 at 1:30 am
Don’t worry about smoking man, he is very cynical, this dialogue from the 1997 movie “Contact” sums him up pretty well.
David Drumlin: I know you must think this is all very unfair. Maybe that’s an understatement. What you don’t know is I agree. I wish the world was a place where fair was the bottom line, where the kind of idealism you showed at the hearing was rewarded, not taken advantage of. Unfortunately, we don’t live in that world.
Ellie Arroway: Funny, I’ve always believed that the world is what we make of it.
TREB is back with another campaign to kill the Land Transfer Tax:
http://www.letsgetthisrighttoronto.ca/open-letter/
They seem to have gone to the Rob Ford school of accounting, as all they do is make up “facts” about how horrible and unfair the Land Transfer Tax is, but never propose anything to replace it.
I also like that they completely ignore the concept of renting or moving to other regions:
“It is unfair to make people who have to move, like downsizing seniors or growing families, pay thousands of dollars more than their fair share, for the same level of municipal services as those who don’t move.”
Hmmmm…. using that logic is it also unfair to have someone with a big house pay more in tax than someone with a small house? They get the same services after all, right TREB? How about if I apply the logic to Realtor commissions… why should that seller pay more in commission for selling a bigger house?
Hey – I like where this is going!
Hey Garth and everyone else,
I’m 28 with about 25k to invest right now. If I’m currently in the low 20% tax bracket should I stick to tfsa’s for now and contribute to an rrsp when I reach a higher tax bracket?
Thanks for all the help.
Yes. — Garth
Skinny semi – <16 foot wide. 700k.
HAM (hot anglo money) and hipsters will be nutso over this.
Set on Brock St. in Brockton Village, with stained glass window inserts – can it have any more British overtones? Serious cred there.
http://www.realtor.ca/propertyDetails.aspx?propertyId=14010224&PidKey=592609039
– Water cooler talk at work has people questioning where the money is coming from, everyone notices everybody's spending spree.
“2. Split income with your spouse”
Does this work in Common law relationships as well, or just a traditional spouse?
Common law, yes. — Garth
According to a report from real estate group Century 21, average price per square meter in France for existing homes dipped 1.8 percent in 2013. But in the greater Paris region, the price per square meter decreased by 2.9 percent, while for central Paris, prices fell nearly 4 percent.
http://www.cnbc.com/id/101366471#_gus
So Paris can go down but Toronto never
#13 Victor:
http://www.torontolife.com/informer/toronto-real-estate/2014/01/27/sale-of-the-week-mississauga-mansion-auction/
************************
Thanks, Victor. I’ll do my part to get this blatant RE lie out to everyone I know.
#79 Calgary Car Guy on 01.28.14 at 1:30 am
In business everyone is an adversary.
You associate, generosity, honesty and good will with pleasure. Machine programed you like that, to make you weak exploitable and a dumb down stupid consumer .
I’m a taker, a hunter, an animal,we all are. But through education, conditioning that instinct is tamed, removed, and crushed, you are taught to associate the hunt with something evil. . I want it all.
That’s business. But the on the outside, I’m soft spoken, a philanthropy mystic, charm and honestly my fragrance.
My customers love me, while my fangs are draining there veins.
That’s a Smoking Man
#79 – Calgary Car Guy
—
So well put, my friend! Spent a few years as a service writer myself — one of the most challenging and often thankless jobs I’ve ever done. Be proud of your honesty, integrity and excellent reputation. These other jokers may need to lie to themselves to make it through their sorry excuses of an existence, but you’ll never have to. All us non-smokers salute you for taking the high road.
Ralph Cramdown Of course, politicians have been promising to simplify the tax code since I was wee, and it never comes to pass.
At the funeral of a colleague, his wife told me that she had worked many years at Revenue Canada and how disappointed she was that the tax form had grown increasingly complex. One of the obvious complexities in Ontario is the stupid separate form you have to fill out for the provincial income tax. This was not always the case. The federal and provincial forms are so similar. The provincial form exists to justify a whole provincial bureaucracy – I’m thinking a 1000 civil servants. Next and maybe the worst is the effect of the judiciary. In the courts, judges get to rule on the validity of the law the result is not simpler.
Simplicity is a virtue in and of itself it needs to be prompted.
One more thing Calgary car guy.
The whole allegory of Dracula is based on business.
To schooled they can’t see the similarity.
Come to my big mansion, see my things, look into my eyes, let me charm you.
The hypnotic effect of a good sales pitch has you thinking your being kissed on the neck, when in fact your being drained.
Huh next business idea.
Dracula school for salesmen.
72 Ontario’s LC – I call that strategy “retiring early cuz I got a boatload of money”. No trick there.
Seriously though, if you have a large portion of your investments in your RRSP, it would help to minimize future tax by withdrawing it before the age of 71 when
the govt will dictate the amount. And your children will
love you when you leave this world.
weak dur goods=try taper tommorow(not this week)
Hi Garth,
Quick question for you: if you make an in-kind contribution to an RRSP with equity (TSX-V listed common shares) and the current market price of those shares are trading for (substantially) less than what I paid for them, does the contribution go in at the current market price or at the original purchase price (my guess is the former)?
Again, thanks for all your insight.
At market value. — Garth
#32 Small Business – Yes you can contribute the unused RRSP portion for previous years. I did not contribute during the first two years of my business operation, but on the third year, when the income doubled, I used the portions from the previous years and avoided pay taxes except for the mandatory CPP, QPP, etc.
As a new entrepreneur, (congrats!), I suggest you find a good accountant who can give you tips on how to legally not pay taxes. Business rules and self employment taxation are very different from those who are employed. If you are a corporation, like someone posted, it is probably better to pay yourself a dividend and invest the income from through company (taxed at 1%, I believe). If you are a sole proprietor, your income minus expenses are what’s taxed.
Tip: December is usually my spending spree time. Depending on your business, it might be better to offset your income by adding more expenses, rather than give it to the tax man. For example, one year, I took extra on-line courses in my field. This year, I bought some more office equipment. It took me about five years of hard learning from experience to learn to run the business financially. Perhaps the ‘fleecing of the tax man’ will make you much wiser in the future. but again, I recommend a good accountant.
Say you have maxed out your TFSA(and its invested appropriately).
Youve put some money into an RRSP but still have room to contribute more and can afford too, but you are still in a moderate/low level tax bracket. (Hey some people are frugal).
Would it make sense to not contribute more to RRSP and open up something like a questrade account and follow some basic couchpotato like principles?
OR just keep adding that extra money into an RRSP?
Im leaning towards another investment account and balancing between the two(rrsp,other investment account).
Or am I missing something?
As usual, more work than I can handle on my sporadic baloney patrols. However, some standouts today!
#6 World According To Garth on 01.27.14 at 7:14 pm
That would make perfect sense if you weren’t completely wrong. However, in the interest of comedy, I wonder if you wouldn’t mind explaining exactly how you think “govt worker” pensions are funded?
You do have an equally clueless friend, though:
#23 bentoverpayingtaxes on 01.27.14 at 8:19 pm
That might be true except for everything you wrote. Get the facts first and THEN distort them. It is a far better way to lie to people than talking about unicorns right off the bat.
And this guy is just funny:
#60 Peter C. on 01.27.14 at 10:41 pm
I think you meant “UFC” and former champion Anderson Silva, and how his leg broke when his kick was checked by current champion Chris Weidman. Think you can throw a full force leg kick against an immovable object and not break a bone? You should get yourself a cape and a big “S” for your chest. The “bird bones” stuff was funny, though. I like how the “diagnosis” ignores the hundreds of thousands of kicks Silva has thrown without breaking a leg and attributes a freak accident to a tinfoil hat vitamin lie.
TEMPLE
http://ca.finance.yahoo.com/blogs/pay-day-/baby-boomer-nest-eggs-unprepared-hit-rising-rates-153816940.html
With Canada’s big banks reducing some of their mortgage rates and the Bank of Canada worried about low inflation, it’s hard to get too concerned about the impact of rising interest rates.
Still, a new survey warns many Canadian investors aren’t prepared for the impact of rising interest rates that will inevitably come.
It says 58 per cent of Canadians with a retirement portfolio didn’t realize that rising interest rates could eat away at their investments, according to the poll from Leger commissioned by CIBC Asset Management.
Those most out of the loop were the Baby Boomers. The survey shows 65 per cent of people aged 55 to 64 didn’t understand the hit their retirement nest egg could take. That’s even though Boomers closing in on retirement are expected to have more of their investments in fixed income assets, such as bonds.
I don’t like RRSP’s and mutual funds – they are indexed to the American casino called the TSX/NASDAQ, which is, over valued and underfunded. It’s always 2 steps forward and 3 steps back. Garth calls it “cycles”. Advisors say “the market will bounce back”. There is a black swan evident when it comes to RRSP’s, and that Swan will bite us all in the keester when we least expect it. The unknown unknown. So what i have i done to grow my money over the last 25 years? Not telling. Thhpppppppt!!
#73 Smoking Man on 01.27.14 at 11:51 pm
#65 TheCatFoodLady on 01.27.14 at 11:20 pm
Like all walks of life, some
‘deserve’ where they find themselves.
………
Based on what, your preprogramed definition of good and evil.
That homeless person in the cold broke a rule. He deserves it.
That one in the cold broke no rules, he’s worth of saving.
I get it. Silly me
———————————————————
Actually Smoking Man homeless shelters, parks and city streets are a daily showcase of the ill and the addicted. In Toronto alone, on any given night, there are around 5,000 homeless people. As many as a third of them have a serious mental illness, like schizophrenia or severe depression. Quite a few are young, LGBT, aboriginal, escaping physical or mental cruelty, and even ex military that have PTSD. It’s unfortunate (that more people are sleeping on the streets). We have to get these people off the streets and get them the help they need be it if it is drugs, alcohol, mental illness — we have to get them the help they require. Unfortunately a lot of them are caught in the cycle and either can’t get out of it or do not want to leave the streets. Once you are homeless, you have no fixed address, so right off the bat you are off the radar for social assistance of any kind. Without a fixed address you can not get a job, health card, licensee, rent an apartment (previous references required) and the list goes on. You yourself (Smoking Man) pass by them everyday if you take the GO train. Quite a few live under the tracks or near them. We all pass by them sometimes without even knowing it. Out here in Oakville we have homeless as well but not to the extent that you do in Toronto. I am compassionate like many and give to the homeless but not open ended cash. If I see someone sitting outside a Tim Horton’s I often ask them if they are hungry and offer to buy them a meal. Then and only then do I get to know that I have helped them in some small way.
Hi Garth,
Quick question for you: if you make an in-kind contribution to an RRSP with equity (TSX-V listed common shares) and the current market price of those shares are trading for (substantially) less than what I paid for them, does the contribution go in at the current market price or at the original purchase price (my guess is the former)?
Again, thanks for all your insight.
At market value. — Garth
***************************
Garth – Thank you for the response.
Eaglebay on 01.27.14 at 8:52 pm
#149 bentoverpayingtaxes on 01.27.14 at 1:40 pm
I’m getting quite the tour of the Lower Mainland.
My daughter lives in Poco. How about the Poco, Burnaby, Maple Ridge area.”
BBY…like Vancouver is a graveyard of dumpy dilapidated houses….street after street….nothing but falling down pits built in the 40’s and 50’s. This aspect of Vancouver generally gives the whole place a desperate degenerate look . I’m never surprised to hear stories of sex saves held in basement dungeons….it has that ‘Silence of the Lambs’ creepy character. If I had to live in BBY I would probably have killed myself or joined the ranks of the mentally ill and alcoholics that form the majority of the population.
#10 Smoking Man,
forget the advertising banner. Make real money – firewall your posts behind a pay-per-read button!
#99 Smoking Man on 01.28.14 at 10:34 am
—
Time to get over yourself, son… Over the last few days you’ve attempted to place yourself on the same level as Sir Richard Branson, a pre-historic hunter and even (wait for it) Dracula. Seriously, just accept the fact that you bombed out of school and you won’t have to pretend that you’re some streetwise predator who also just happens to be the smartest guy in the room. Judging by your incoherent ramblings, it’s pretty obvious that it aint the case.
http://www.torontolife.com/informer/toronto-real-estate/2014/01/17/toronto-real-estate-condo-house-prices-fall/
All the laws of Newtonian physics suggest that a thing simply can’t go up and up forever. And yet, Toronto’s real-estate market seems to exist in a universe where “down” isn’t even a concept. Everything goes up—the buildings, the prices, the population—and it can start to seem as though there’s no other way. It can’t always be like this, but, for now, the numbers indicate that things will remain as they are. Here, four reasons Toronto’s real estate is safe—for the moment.
===============
Pump and dump continues.
#97 Ontario’s Left Coast on 01.28.14 at 10:28 am
Your name says it all.
You don’t have the foggiest idea that you are programed and conditioned to serve, and feel happy about it.
Brag about it. WTF
at the same time looking in the mirror and wondering how some people are zillionairs, and others, well just looking at mirror asking questions.
Have so much work to do here still.
#6: From 2006-10, I made less than 40k a year and managed to save $25,000 in my RRSP during that time. So, no more excuses please.
More Pimping by the MSM that housing is going to be just fine thank-you very much for 2014!!
YuP! And Rob Ford is going to give up drinking!
LOL
BOC pandering to union interests in Ontario….the CDN FED is oblivious to the facts or lying on inflation…..So why is the BOC bashing the CDN dollar when also ignoring the facts on inflation?
“So, who said there was no inflation in Canada? The latest numbers from Statistics Canada show that worker wages in B.C. have jumped $250 a week (15 per cent) between January and October of last year (assuming no major revisions). Wage parity with Alberta, Saskatchewan and Newfoundland will be inevitable.
The real question is whether B.C. wages will exceed those in Alberta, recognizing the former’s dearth of skilled labour and more geographically challenging operating territory. Undoubtedly the answer will be “yes,” once the first of the 14 LNG consortia start spending their billions on pouring concrete, welding steel and fitting pipes.
And what will happen to resource worker wages in the central lower-paid provinces if B.C. pulls hard? In Ontario right now, the average weekly pay for Statistics Canada’s equivalent grouping is only $1,700. That’s nearly 20 per cent lower than the prosperous bookends of the country. The interprovincial wage gaps can’t get much wider before the old adage “Have torch, will travel” starts to resonate in Central Canada. Then we’ll start to see inflation.”
Do we have to see a reaction from Ont before we get a rational fiscal ploicy from the bank…..or is it all about Conservative votes in the pop centers of southern Ont? The truth is out there.
Front page news on CTV….unreal how the media joins in this pump fest…but they wont write any articles about how the TD mortgage clause change is gonna destroy borrowers when the market corrects.
http://toronto.ctvnews.ca/luxury-home-sales-surge-in-vancouver-calgary-toronto-1.1659333
104 Enthalpy,
It depends on a lot of different things. You mention that you are already in a moderate / low level tax bracket. Is it likely that you will remain there for the rest of your working life? Or is it likely that you will join a higher tax bracket at some point. If you’ll be moving up in tax brackets soon then it probably makes sense to save that contribution room for a time when you’re paying more taxes.
Also, you mentioned opening up a self directed trading account, which leads me to believe the rest of your RRSPs are in a mutal fund at a bank? You should look into opening up a self directed trading account for your RRSPs anyways. That way you can invest in ETFs or discount mutual funds. My bank offers a line of mutual funds for self directed investors. They are EXACTLY the same fund as the regular mutual fund, but you save 1% on fees that otherwise would have gone to some guy at the bank to recommend the most obvious fund and hit a few key strokes to make it happen. I’ve found that these discount mutual funds actually compete quite well with ETFs on both fees and returns.
At 45north
I believe your right on that one, although I am hoping you are wrong so I can cash in on a depreciated market. Even the 5% layoffs in the NCR don’t actually account for 5% of physical people. Many of those cuts are attrition based. In my personal experience, I see it everyday where some fancy footwork has moved bodies around to allow for job cuts as per the mandate, without removing physical resources.
What I think will add to the situation would be all the new development, especially in Barrhaven and Kanata/Stittsville where they are putting up new builds like crazy over the last 8 years and are aggressively pushing new developments in the last 6 months – how many people locally are still in the market to purchase or upgrade to a new build? Is it me or is there an endless supply of people coming out of the woodwork to buy a new home locally (which I am bearish about)?
@ Bob Rice
Want to know the easiest way to save a LOT of money? Keep driving your old car… as long as you can. Cars can easily last 15-20 years if you take care of them. That will save you thousands per year… but people want their shiny new cars, I guess…
I have always preached this. I’ve bought two new cars in my life (age 40) and the first one was when I married my wife. I am driving that car now (it’s 15 years old) and she has a new one again. We WILL drive both of them into the ground. Before this, I drove other old cars handed down by my parents. One good car is needed for the kids and family—don’t want to get stuck on the road, but people buying $80k BMW SUV’s are only hurting themselves in the long run. My friend has a penchant for cars and he has been broke his whole life. He said his head swims at night with thoughts of finances etc., but when you switch vehicles 1-2 times a year what do you expect? I’ve spent a lot of money on tech gadgets and the like. . .I always upgrade my phone etc., but in the grand scheme of things I justify it because I have still spent less than I would have if I had bought just ONE new F150 truck and serviced/drove it for several years like all my friends do. Want to know what’s killing your savings—my guess is it’s the vehicles. Buy used, or better yet, save and buy new (with cash) and drive that car into the ground over 15-20 years ensuring regular maintenance—you will have a good/reliable car with a maintenance record that is known to you.
Orders Of Computers And Electronic Products Plunge To 1993 Levels…
More signs of the USA Economic Renaissance… NOT.
for the gold bugs……..
http://www.investmentreview.com/expert-opinion/the-worst-investment-ever-6488?utm_source=EmailMarketing&utm_medium=email&utm_campaign=Newsletter
Recreational properties in trouble, Big White (near Kelowna) as an example:
http://whispersfromtheedgeoftherainforest.blogspot.com/2014/01/kelownas-big-white-feeling-real-estate.html
“History shows that the longer you hold gold, the worse it is,” writes Prof. George Athanassakos, who holds the Ben Graham Chair in Value Investing at the Richard Ivey School of Business.
http://www.investmentreview.com/expert-opinion/the-worst-investment-ever-6488
#72 Ontario’s Left Coast
“slightly different RRSP conversion strategy”
“retire earlier and live off some of the proceeds before there are any government benefits to trigger a claw back”.
We are living this “contrarian cash-out strategy”. A year and a half ago we sold our farm, purged our stuff down to 7 utility shelves (now stored in my MIL’s basement), took our meager $1200 monthly pension 8 years early in exchange for our freedom and hit the open road with little more than our clothes.
We have augmented the pension by cashing out $5000 per year each from our RRSP’s, netting $9000 after withholding tax. That with our pension and the small but growing etf dividends from our house sale portfolio, (balanced, diversified and liquid) has made what appears to be living on fresh air and a dream possible.
Also making it possible is no payroll taxes, no property taxes, house insurance or utility bills. We don’t keep a fixed apartment. We can’t afford to pay rent on an apartment we’re not using and travel. Nor does it make financial sense. We have instead been short-term renting our way around via kijiji costing on average $750 per mth all in. Our only fixed expenses are our postal box, smart phones and vehicle insurance.
We will re-evaluate at age 60 when we start getting our CPP if it still makes sense to continue cashing out our RRSP’s. By then I think our portfolio dividends will play a bigger role in our income.
Until then we will continue chasing the sun, moving with the seasons, currently spending our second winter in Florida. Catching up on the reading, walking the beaches along the ocean, letting life unfold.
I see before me an array of people with financial problems, and in some cases with large holdings that includes real estate, investments, tax problems, children, cottages, insurance, and lets not leave out the proper documentation of a will; medical power of attorney; and general power of attorney. Mr. Turner details 6 cool things to do, but he is wrong, as there is a 7th part, and that is for a small fee get yourself a fee based financial advisor to do it all as a package deal – need I say more?
…These devices connect directly to the pump’s power
supply, and include a Bluetooth chip that enables thieves to retrieve the stolen data wirelessly — just by pulling up to the pump and opening up a laptop. The defendants allegedly then encoded the stolen card data onto counterfeit cards, and armed with stolen PINs withdrew funds from victim accounts at ATMs.
http://krebsonsecurity.com/
Any suggestion will be much appreciated.
I am 37 year old single mother.Have maxed out my TFSA conribution. my three and half year old has almost 14000 inher RESP. Both are with CDSPI.
I have 2500 with RRSP with PC financials.
I am saving 1000 dollars a month and. would like to invest about 800 dollars a month
Here is what i cannot decide.
1. Should i open a Qtrade account and move all my funds there as i feel MER at CDSPI is steep.
2. leave the funds as it is and open a new registered saving account in TD Trust and invest in e series contributing 1000-850 ever month.
3. At this point in my life, how should I be managing my money.
I am cutting costs everywhere. buy second hand stuff. Teaching my three year old to collect soda cans and sell and fill the money jar. I plan to open an account for her and invest few dollars that she earns every month. I think TD’s e series would be good for her. THis is besides her RESP that i am contributing 2500 every year.
I blew all my money that I earned during my 20s and early 30s. I am trying to catch up and do better.
Any suggestion will be much appreciated.
I don’t give out gifts that often.
All in Black Berry right now.
OK at leased 1/2
Camel Toe. Sprinkled with Android…
That’s my charity for 2014
Also, i do not have any debt. Thank God. Use ccd for groceries and other day to day stuff and pay it off every month.
Wow luxury homes are selling like crazy according to the Toronto Star
http://www.thestar.com/business/real_estate/2014/01/28/luxury_house_sales_hit_new_records_across_canada.html
I guess its because of the number of world millionaires growing so much as they claim.
http://www.thestar.com/business/personal_finance/2013/06/18/rich_getting_richer_study_finds.html
But Canadian growth doesn’t seem to match the rest of the world when it comes to number of new millionaires. We are only at 6.8% growth compared to over 9% for the entire world and 11.7% for North America. Looks like we are bringing down the numbers. Lets do better shall we.
http://m.intomobile.com/2014/01/28/blackberry-os-1021-launches-but-cares/
Remember it’s dangerous to by individual stocks.
Chachingaling…….. WooHoo
#110 bentoverpayingtaxes on 01.28.14 at 12:39 pm
You said nothing about PoCo and Maple Ridge.
Must be real nice areas to live in!
Great news, I just found out I am living near a gigantic oil field that I had thought was only enormous. As soon as the big money boys find out the real estate price suppression scheme is up, I will be coming down to the big smoke to size up some suspenders. Heck, I will go down to Jane and Finch and hustle me up a big fat Havana. Plus, I am glad I did a couple heavy tours of Europe while the hucksters were still pumping greater Canada. What’s seeing a Da Vinci in St. Petersburg at the Hermitage worth now days?
SM 114
–
It must be pretty easy to base every single rebuttal with that “You’ve been programmed” garbage. You must’ve really given them hell in debating class… Oh wait, you missed that year. Done here for now because I refuse to match wits with an unarmed person.
#130 Smoking Man on 01.28.14 at 3:32 pm
I don’t give out gifts that often.
All in Black Berry right now.
OK at leased 1/2
Camel Toe. Sprinkled with Android…
That’s my charity for 2014
_____________________________________________
Smoking Man I hope your hunches on Black Berry pay off. I was in it with my friends (Old guy investor club) last year. I made a considerable killing on it from 2012 to 2013, got out just after it peaked. My friends all though I was crazy but tripling an investment is more than enough to take home to Mama. They had feelings that it was going towards $28.00 to $40.00, they stayed in and lost out on a great return. They didn’t loose any cash but they they didn’t make any. I would surmise you are shorting? Good luck, been there done that one. Oh yes I forgot to mention my Old guys investor club is an excuse for all of us to meet once a week for dinner and drinks, they are all wealthy retires and I am the only old guy still running a business.
@ smoking man
All in Black Berry right now.
That’s my charity for 2014
————-
You sound like a bigger and bigger fool every time you post something. I barely read your cryptic ciphers unless they are short (which they usually are not). Telling people to go “all in” on a stinker like RIM is really low. I remember when some fool on this blog talked about how great and cheap RIM was and how he just bought a ton of shares. I laughed my bag off—he was obviously an old man like you who had zero tech savvy. RIM is an albatross around the neck of every investor. My biggest mistake was not going all in on Apple after the first iphone release when I saw the incredible value in the company (had been using Apple products religiously for years at that point). The problem was I had zero money as an investor. C’est la vie.
#111 Herb on 01.28.14 at 12:40 pmforget the advertising banner. Make real money – firewall your posts behind a pay-per-read button!
………..
Herb when you make it your life’s mission to poke peoples believe systems in the eyeball in order to expand there metal vocabulary , doesn’t make you to popular.
Some people collect stamps.
#104 Enthalpy & #119 Josh in Calgary
You might be missing something re contribution room and deduction limit which are not one and the same http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/cntrbtng/lmts-eng.html).
If you earned $40K last year, this year you get 18% x 40K = $7,200 in contribution room. You can put that amount into your RSP, but how much you choose to deduct (between 0 and $7,200) is up to you. At $40K per year, you might have a marginal tax rate of about 20%. If you earned $120K the next year, you’d have a marginal rate around 40% (ballpark). If you deducted none of the $7,200 last year, you could deduct it fully from the 120K this year.
No need to have a separate holding account in the interim. Also, the money in the RRSP still grows tax free whether you choose to deduct it from income or not.
Ain’t that all true, Garth?
Yup. — Garth
#47 Bob Rice on 01.27.14 at 9:50 pm
“I think it’s unpatriotic that many people in this country expect me to fund their existence b/c they can’t support themselves… ”
I don’t have a big problem with the government taxing me to support those who really can’t support themselves. Sure, there are too many welfare scammers and EI scammers, and so on, but there were good reasons for establishing things like the OAP and CPP in the first place.
What really riles me is the thought that the government will put the touch on me to help out those who had every opportunity to provide for their own retirement, but didn’t. You know, the people who lived paycheque to paycheque despite generous incomes, while failing to invest for their future. Those people can live on cat food or whatever when they get old as far as I’m concerned – zero sympathy on my part.
@129
You’re also a dentist too? If you look at the CDSPI’s MER for their funds, you’ll realize that they’re exactly as ETF’s from iShares, and with a much lower MER as well. Not sure if there are fees associated with selling your mutual funds, but you should look into it.
I’m invested in ETF’s that I manage myself. The lesser the distance between me and my money, the smaller the charge and expenses.
TD e-series would be your best choices, look up Canadian Couch Potato and read his articles. Ask more questions and do research.
LOL… Detroit $1 homes could be a ripp-off
http://finance.yahoo.com/blogs/daily-ticker/this-detroit-neighborhood-is-so-bad-that–1-homes-could-be-a-rip-off-195842661.html
Something for Canadians to be proud of. A London Ontario company just released a new device that saves lives in the field of COPD. (OPEP-AerobiKa)
http://www.lfpress.com/2014/01/28/londons-trudell-medical-international-unveils-device-to-ease-lung-disease
What I meant was CDSPI mutual funds are exactly the same as iShares ETF’s. CDSPI have a lot higher MER than ETF’s, usually 2-4x more too.
#136 Ontario’s Left Coast on 01.28.14 at 4:17 pmIt must be pretty easy to base every single rebuttal with that “You’ve been programmed” garbage. You must’ve really given them hell in debating class… Oh wait, you missed that year. Done here for now because I refuse to match wits with an unarmed person.
.,……
Don’t forget your man purse on the way out.
#137 Holy Crap Wheres The Tylenol on 01.28.14
BBRY is a patent lying in a hospital bed after a heart attack and breathing on its own
It won’t be running a marathon anytime soon. But I’m calling a brisk walk within the next 3 to 6 months.
HAM? What HAM?
http://mobile.bloomberg.com/news/2014-01-28/chinese-homebuyers-thronging-sydney-create-mini-bubble-frenzy.html
Of course Garth will dismiss it.
It’s Sydney. Why would I care? — Garth
HAM invading the land of Oz now!
Re: #24 omg on 01.27.14 at 8:31 pm
There is no good value in equities anywhere in the world today. Other than maybe uranium shares only a total fool would own stocks.
#126 AfterTheHouseSold on 01.28.14 at 2:34 pm, and
“slightly different RRSP conversion strategy”
—
Thanks, mate – It’s good to see a positive example of this strategy in action. Really interesting to see how you put this plan together!
Speaking of taxes and money saving policies, a new study confirms that the only people who will have an advantage from the conservative government’s proposed income splitting policy are the richest families. Surprise, surprise.
http://www.pressprogress.ca/en/post/conservative-income-splitting-plan-tax-gift-wealthiest-families-study
Check out the lefties who wrote the report. — Garth
@ #107 Don Derc on 01.28.14 at 12:12 pm
I don’t like RRSP’s and mutual funds – they are indexed to the American casino called the TSX/NASDAQ
————————
Dude, your comment shows you have no idea what you’re talking about.
I don’t even know where to start. Maybe investing for dummies or something. No offense.
#145 Randy Randerson on 01.28.14 at 5:37 pm
@129
You’re also a dentist too? If you look at the CDSPI’s MER for their funds, you’ll realize that they’re exactly as ETF’s from iShares, and with a much lower MER as well. Not sure if there are fees associated with selling your mutual funds, but you should look into it.
I’m invested in ETF’s that I manage myself. The lesser the distance between me and my money, the smaller the charge and expenses.
TD e-series would be your best choices, look up Canadian Couch Potato and read his articles. Ask more questions and do research.
———————————————————
thanks Randy. no i am not a dentist but my sibling is. So that is how got in there. I have been doing lots of research. That is how I found out about their higher MER.
I have one question if you dont mind.
why did you choose ishare instead of e td’s e-series or Qtrade. you will be helping me a lot. I am meeting the cdspi agent in march and want to be clear what i would like to do next.
I put maximum money on tfsa once a year, contribute 210 dollars a month towards my daughters resp. have only 2500 in rrsp but would like to contribute 18 percent of what i make monthly into it. I have lots of room in rrsp. and would like to have another saving account for myself and my daughter to contribute some fund every month.
is it prudent to do all in td’s e series as they do not charge anything to buy and sell–mostly buy– on a monthly basis.
I am also thinking of questrade and ishare. dont know what to do. reluctant to go to financial planner as i have trust issues. but i am scared to manage it my self as well. but i know cdspis mer is too high.
Squatter on 01.28.14 at 4:05 pm
#110 bentoverpayingtaxes on 01.28.14 at 12:39 pm
You said nothing about PoCo and Maple Ridge.
Must be real nice areas to live in!
If you have failed to the extent that you’re living back of beyond in a savage hinterland with crackheads and toothless hillbillies there isn’t any pity here. Poco and MR are equivalent to living life under the rim of a homeless shelter. I can only surmise why the religious fervor of people gets more fervent the farther they exist from civilization…..The idea that death in an afterlife has to be more pleasant than life in Pitt Meadows . That perpetually miserable geography probably explains the drunkenness and drug problems that plague those areas.
#75 Ralph: “Be that as it may, taxation is currently a great game, and I need to spend a number of hours every year optimizing (minimizing) it for me and mine. So be it.”
**********************
The tax form used to be a single page, front and back. Basic. Simple.
It is now 4 pages long, front and back….reams of paperwork involved, 20 or more attachments.
The feds are dazzling us with their footwork to the point where most of us are intimidated, unable to decipher the forms — we’re adding figures here, deducting figures there. And so we opt to go to so-called professionals. Another job creation scheme.
#110 bentoverpayingtaxes on 01.28.14 at 12:39 pm
I bet you know something about the Victoria area.
It’s where I work but live in Oceanside.
#87 Live Within Your Means: “Have it rust checked every year….”
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This is interesting…’rust checked’. Is this an expensive procedure? Never heard of it. And I agree — take care of the car and it will last 20 years.
I disagree with some of the author’s points.
1) Withdrawals in years when your income is low will indeed allow it to be taxed little if at all …. BUT the benefit from a lower tax rate on withdrawal is only one benefit from the RRSP. The greater benefit comes from income-sheltering from tax …
You will then have destroyed contribution room that could have sheltered income from tax for the next 50 years. Maybe you have decided that you will never be able to save enough to maximize the allowed contribution anyways. Maybe you have decided that Aunt Molly will never leave you that legacy that would benefit from income-sheltering. Maybe you have decided that you will never get ahead in your job and earn highly taxed income in the future. Maybe you have decided that you will never marry someone rich whose assets could be income-sheltered.
Are you sooooo negative on your life?
2) The tax refund/reduction on contribution is not “as close as we get to magic”. The tax reduction is a loan from the government that you must pay back on withdrawal ..along with all the income it earned. Think of it like your best friend Bob giving you his money to invest on his behalf. His money makes up some % of the account total to start. All the profits it earns are his. At no time do you consider the whole account to be ‘your own’. You face no benefit/cost from the arrangement because on withdrawal you must give Bob back his % of the account. The taxes paid on RRSP withdrawals are an allocation of principal, not a delayed tax on the profits earned.
You never contribute ‘to get the refund/reduction’. There is no benefit from the reduction.
Duh. — Garth
104 and 119
Appreciate the input. Thanks
Garth, two things. Is that seriously your hair do? And, cold sores are not sexy but Toonerville in the winter, c’mon. What could be more fun? There’s a couple things going right out here, unfortunately they are between wind and chill.