FISCAL AGENTS: Financial Services Group


Open the QuickNav window
Home
Search
Site Map
Contact

The Knowledge Bank

The Money Centre

The Learning Centre

Financial Tools

The Money Management Newsletter
General Interest
GICs / Fixed Income
RIF Planning
RSP Planning
Savings
Managing Money
Choosing Fin.Services
Insurance Products
RESP Savings
Taxes / Estate Matters
Home Ownership
Companion Advisor
Product Reviews
E-Newsletter Archive
Front Page Archive
Subscription Services

Products and Services

About Us




Google

FiscalAgents.com
World Wide Web

Special Glossary of Retirement Terms
Find out more
Click above to find out how Fiscal Agents can help you find an efficient RRSP.
Now Quick-Nav enabled!
Use this link to connect you directly to additional useful information related to RRSPs.

 

The Companion Advisor: Retirement Planning

Why RRSPs should be the cornerstone of your portfolio

If you are like most people, you may feel the need to start making your investment decisions for this year right about now.

The fact of the matter is that your RRSP should be the foundation of your investment portfolio. RRSPs are not only the most enduring and important tax shelter available in this country, they're usually the best possible way for you to plan for your future. 

You just can't beat the fact that your entire eligible RRSP contribution is tax-deductible. If you're in the 40 per cent marginal tax bracket, for example, and contribute $5,000 to your RRSP, you are entitled to a $2,000 tax refund. So that $5,000 investment really only cost you $3,000. 

Even more significantly, the entire $5,000 you contribute into your RRSP is an advance toward your future. Invested prudently, it can continue to grow and accumulate interest, dividends and capital gains. It's all tax-free inside your RRSP until you're 71 years old and for decades after that, if you wish, inside your RRIF. By leaving your RRSP to compound and grow for all of the many years until your retirement, the money can multiply many times over. 

A few simple calculations will demonstrate what I mean. 

If you choose to invest $2,500 outside your RRSP every year, for instance, you would have to first earn about $3,500 and send the government $1,000 as income tax, assuming you're in the 40% tax bracket. You would also have to pay tax on your earnings from that annual $2,500 investment, every year. After 40 years, you would end up with a nest egg of $435,834, assuming a very conservative 10 per cent return. 

What happens when you invest that same $2,500 in your RRSP instead? You would have the full $2,500 to invest, and you'd get a $1,000 tax refund as well. Of course, all your profits inside your RRSP would be tax-sheltered as they grew. Your plan could grow to more than one and a quarter million dollars within the same 40 years. 

That's a 300% difference in your personal bottom line. 

If none of the above arguments have convinced you to maximize your RRSP contribution, this one should. Neither your present employer nor the government can afford to support you once you stop working. Only the very richest pension plans will provide you with a decent living wage, indexed for inflation. Plans like Old Age Security, Canada Pension Plan and Quebec Pension Plan can not meet all the retirement income needs of an active senior nor provide the funds for major medical expenses not covered by provincial health plans. The 50 per cent of seniors who qualify for GIS in this country live at or below the poverty line. 

There really is only one conclusion to come to. Maximize your RRSP, to the best of your financial abilities every single year! 

* * *
Use this link to load a printer-friendly
version of this document.

Do you want to share this page with someone else?
Send this page to
Sending
Format
Text
HTML
Your email address
 

Questions about the above send e-mail to:
moneyman@fiscalagents.com BACK

© , Fiscal Agents Money Management Newsletter
25 Lakeshore Road, Oakville, ON L6K 1C6.
(905) 844-7700





Fiscal Agents Home

Knowledge Bank Money Centre
Learning Centre Financial Tools
Newsletter Products & Services
About Us    

Legal | Site Map | Home | Search

Copyright © 1984 - Fiscal Agents Financial Services Group


Questions? Comments?
Use our Feedback page to contact us.

 
Companion Advisor
Individual pension plans can generate healthy tax savings and peace of mind throughout retirement

LIFs, RIFs and other IFs

Annuity Taxation

RSP Investing Strategies

Innovative strategies for a worry-free retirement

Is the RRSP dead?

Tips and more to help you make the most of your RRSP!

Registered Retirement Savings Plans: More than just a tax break

RRIFs:- Registered Retirement Income Funds

Calculating your retirement needs

Factors to weigh when choosing your RRSP investments

RRSP contribution or mortgage repayment?

Women and RRSPs: Just do it!

Why RRSPs should be the cornerstone of your portfolio

Where retirement is concerned, borrow for tomorrow



The Money Management Newsletter:
w
RRSP Planning
w Retirement Income Planning