Comments on: Some RRSP basic strategies http://www.thefinancialblogger.com/some-rrsp-basic-strategies/ This is where your finance takes place Wed, 19 Nov 2008 16:24:03 +0000 http://wordpress.org/?v=abc By: Weekend Reading - Feb 8, 2008 | Million Dollar Journey http://www.thefinancialblogger.com/some-rrsp-basic-strategies/#comment-1790 Weekend Reading - Feb 8, 2008 | Million Dollar Journey Fri, 08 Feb 2008 10:32:44 +0000 http://www.thefinancialblogger.com/some-rrsp-basic-strategies/#comment-1790 [...] The Financial Blogger writes about some RRSP strategies.  What I learned from the article was that you can get deferred payment RRSP loans.  This means that you can get an RRSP loan earlier in the year and pay it back when you get your tax return.  I will post my thoughts on RRSP loans next week. [...] [...] The Financial Blogger writes about some RRSP strategies.  What I learned from the article was that you can get deferred payment RRSP loans.  This means that you can get an RRSP loan earlier in the year and pay it back when you get your tax return.  I will post my thoughts on RRSP loans next week. [...]

]]> By: The Financial Blogger http://www.thefinancialblogger.com/some-rrsp-basic-strategies/#comment-1787 The Financial Blogger Thu, 07 Feb 2008 11:40:53 +0000 http://www.thefinancialblogger.com/some-rrsp-basic-strategies/#comment-1787 CR, When you fill in your tax report you can choose to not declare the whole amount and report it in a future year. However, it is up to you to keep track of what you contributed and what you declared as RRSP. Therefore, you would get the tax deduction according to the amount deposited in your RRSP account and can claim the difference later on :-) CR,
When you fill in your tax report you can choose to not declare the whole amount and report it in a future year. However, it is up to you to keep track of what you contributed and what you declared as RRSP. Therefore, you would get the tax deduction according to the amount deposited in your RRSP account and can claim the difference later on :-)

]]> By: Customers Revenge http://www.thefinancialblogger.com/some-rrsp-basic-strategies/#comment-1784 Customers Revenge Wed, 06 Feb 2008 17:45:28 +0000 http://www.thefinancialblogger.com/some-rrsp-basic-strategies/#comment-1784 How do you claim your tax deduction against future income in another tax bracket? When you contribute to an RRSP don't you just get an RRSP slip that year to be used against that year's income (or for contributions in Jan/Feb you can choose which year)? How do you claim your tax deduction against future income in another tax bracket? When you contribute to an RRSP don’t you just get an RRSP slip that year to be used against that year’s income (or for contributions in Jan/Feb you can choose which year)?

]]> By: The Financial Blogger http://www.thefinancialblogger.com/some-rrsp-basic-strategies/#comment-1779 The Financial Blogger Tue, 05 Feb 2008 02:59:30 +0000 http://www.thefinancialblogger.com/some-rrsp-basic-strategies/#comment-1779 CR: I would add that if you are not too comfortable with leveraging strategies, you can still contribute to your RRSP but claim the tax deduction later on when you are making more money as mentioned in the previous comment. It is another great way to maximize your tax return! CR:
I would add that if you are not too comfortable with leveraging strategies, you can still contribute to your RRSP but claim the tax deduction later on when you are making more money as mentioned in the previous comment. It is another great way to maximize your tax return!

]]> By: Customers Revenge http://www.thefinancialblogger.com/some-rrsp-basic-strategies/#comment-1775 Customers Revenge Mon, 04 Feb 2008 14:52:51 +0000 http://www.thefinancialblogger.com/some-rrsp-basic-strategies/#comment-1775 On point about RRSPs, which I learned firsthand by taking a loan to max out the RRSP. I would recommend AGAINST it if your income will go up in the future. If you are still young, especially if you live in an oppresive tax regime like The Financial Blogger and I do, then you should avoid making your RRSP contributions until you are in the top tax bracket. Reason is this: As long as you don't buy and sell then your outside-of-RRSP assets grow tax free anyway. As well, if you take a loan then your interest for the purpose of investments is tax deductible and so usually at least 30% lower. It's not brain surgery that you should take a loan to invest, even outside the RRSP (Correct me if I'm wrong but the Smith Manouvre is a form of this). So, make the investments but don't contribute to RRSP if your income will get much larger within a few years. Then, when your income is in the highest bracket you contribute to the RRSP. You will have a lot of room because you didn't use it before, so slam the money in until your taxable income just touches the top of next lower bracket and claim your huge tax refund. Do the same until all your room is used up. Do the math for your specific situation but if, for example you are in an entry level professional position or recently out of school, or like the Financial Blogger, going to MBA school expecting to multiply his income soom, then it's probably worth it to wait a couple of years and build up the room. Important to still invest, however, just not in the RRSP. On point about RRSPs, which I learned firsthand by taking a loan to max out the RRSP. I would recommend AGAINST it if your income will go up in the future. If you are still young, especially if you live in an oppresive tax regime like The Financial Blogger and I do, then you should avoid making your RRSP contributions until you are in the top tax bracket.

Reason is this: As long as you don’t buy and sell then your outside-of-RRSP assets grow tax free anyway. As well, if you take a loan then your interest for the purpose of investments is tax deductible and so usually at least 30% lower. It’s not brain surgery that you should take a loan to invest, even outside the RRSP (Correct me if I’m wrong but the Smith Manouvre is a form of this). So, make the investments but don’t contribute to RRSP if your income will get much larger within a few years.

Then, when your income is in the highest bracket you contribute to the RRSP. You will have a lot of room because you didn’t use it before, so slam the money in until your taxable income just touches the top of next lower bracket and claim your huge tax refund. Do the same until all your room is used up.

Do the math for your specific situation but if, for example you are in an entry level professional position or recently out of school, or like the Financial Blogger, going to MBA school expecting to multiply his income soom, then it’s probably worth it to wait a couple of years and build up the room. Important to still invest, however, just not in the RRSP.

]]> By: telly http://www.thefinancialblogger.com/some-rrsp-basic-strategies/#comment-1764 telly Fri, 01 Feb 2008 18:37:31 +0000 http://www.thefinancialblogger.com/some-rrsp-basic-strategies/#comment-1764 Better yet, if you file form T1213 you can have less money reduced from your pay cheque and use that savings to contribute more to your RRSP upfront. Even more compouning (and less loans to the government)! Better yet, if you file form T1213 you can have less money reduced from your pay cheque and use that savings to contribute more to your RRSP upfront. Even more compouning (and less loans to the government)!

]]> By: MillionDollarJourney http://www.thefinancialblogger.com/some-rrsp-basic-strategies/#comment-1763 MillionDollarJourney Fri, 01 Feb 2008 17:36:44 +0000 http://www.thefinancialblogger.com/some-rrsp-basic-strategies/#comment-1763 Great post! I have a post written about RRSP loans as well that will be posted next week. Great post! I have a post written about RRSP loans as well that will be posted next week.

]]> By: Silicon Prairie http://www.thefinancialblogger.com/some-rrsp-basic-strategies/#comment-1762 Silicon Prairie Fri, 01 Feb 2008 17:19:40 +0000 http://www.thefinancialblogger.com/some-rrsp-basic-strategies/#comment-1762 That's a good trick, but it's all about finding how much you can afford to contribute. I pay all my taxes at the end of the year so instead of waiting for a refund I can make bigger contributions during the year and get the same advantage. I'm not sure how a loan would factor in... investment returns should be greater than 7%, but getting an advantage of a few percent for a few months on a small amount doesn't seem like much. It's probably better to earn the money, then contribute it plus the interest that I would have paid on a loan. That’s a good trick, but it’s all about finding how much you can afford to contribute. I pay all my taxes at the end of the year so instead of waiting for a refund I can make bigger contributions during the year and get the same advantage. I’m not sure how a loan would factor in… investment returns should be greater than 7%, but getting an advantage of a few percent for a few months on a small amount doesn’t seem like much. It’s probably better to earn the money, then contribute it plus the interest that I would have paid on a loan.

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