I find that many who are in debt tell a similar story, “I was ok then I was hit by a couple unexpected expenses.” Personally I cannot remember a year in my adult life that unexpected expenses have not shown up, and this is excluding property tax or other annual expenses that often get lumped into the unexpected category. (more…)
Posts Tagged ‘Saving’
A simple tool to grow your Net Worth Date posted June 17th, 2011
Every month most of us receive a list of bills, payments taken from your account, a constant reminder of how much you owe, and the mountain of expenses most face each month. This contrasts the positive statements we get, such as, investment statements, equity and value of your home, which are sent out quarterly or annually in most cases. Taking the time to acknowledged and gauge your success is a simple and in many cases an amazingly effect way to not only visualize your success, but increasing your financial well being.
I recommend keeping at minimum an annual net worth statement. This helps you see where you stand financially, and more importantly creates a map of your financial success. This tool helps clearly layout your progress in building a solid financial future. As your net worth grows it tends to motivate more success in the same direction. I have seen great results from this simple tool. You can follow this link to a simple template to create your own net worth statement, and remember to complete it every year, as this tends to create the best results.
RRSP Deadline Date posted February 25th, 2011
The 2010 RRSP deadline is March 1 2011. If you are planning to get an RRSP (Registered Retirement Savings Plan) this year time is running out.
Vancouver RRSP Solution Date posted February 22nd, 2011
We do maintain an office in Vancouver, however for many our mobile solution seems to be much more convenient. We are happy to come to your office, home or local coffee shop. We can offer full RRSP (Registered Retirement Savings Plan) service, RRSP loan service and a full array or solutions where you are. No need to fight traffic or wait in lines. Investing in your future has never been easier.
If you are interested or would like more information please call our office 604 637 7422.
Should I save my RRSP Contribution Room? Date posted February 22nd, 2011
Most of us like the idea of saving on tax, so if you have the money to save in a RRSP and you have determined the tax savings are large enough to make it worthwhile, there are still a few situations where you might want to wait to make that contribution. Below I discuss a couple of situations where even if RRSP’s make sense for you, you may want to hold off investing in an RRSP.
Expecting a buyout? Many companies offer significant buyouts to long time employees a few years before retirement when trying to cut back staff, labor costs or shift the direction of the company. Although a large cheque can be exciting it can also create a significant tax issue. One simple solution to this is to take the buyout and put it in a RRSP. With this option the deduction the RRSP creates offsets the taxes on the buyout. As a lump sum like this will often push you into a much higher tax bracket than usual, this is often a great time to use your RRSP room to save tax, that is if you have enough RRSP room.
High income year. If you get a bonus, or sell an asset (such as a rental house) that sends your income into a higher tax bracket than you normally would be in, this could be worth saving your RRSP room for.
Skip a low income year. If you happen to make less one year than normal, then skipping the deduction that year may make long term sense.
When planning your finances it is important to look into the future and plan for low income years, high income years and any future financial transactions that may impact your tax situation.
Are RRSP’s Creditor Protected? Date posted February 19th, 2011
It wasn’t too long ago that pensions, some locked in retirement accounts and insurance products were the only protected option for Canadian investors in the event of bankruptcy. For the individual investor only the insurance options were available, as the rest would need to be set up by their employer (if they have one). However as of July 2008, Bill C-12, an amendment to the Bankruptcy and Insolvency Act changed this. This change provides the same protection for RRSP’s, Spousal RRSP’s, RRIF’s and some other registered accounts.
Hopefully no one invests with the intention of going bankrupt, but managing risk is about handling what we did not intend. What this protection provides is a planning opportunity for those who want to protect themselves from this risk. This could be a business person who wants to protect his retirement savings from business risk or a family hit by the financial devastation that can follow illness or injury.
The money does need to be place into a protected account a year before, and before you know of the pending issue. The main purpose of this change as I understand it was to extend the same benefits of retirement savings offered to employees with a pension to those who do not have access to a pension. As always before counting on this protection I would recommend discussing your unique financial situation with a professional as the smallest detail can make a big difference.
A last point would be to consult with a professional before accessing your money if you find yourself struggling financially. Too often I see people cash out there RRSP’s and other protected investments trying to turn things around, when they could have saved those assets and used them to jump start a new financial life.
RRSP’s White Rock, South Surrey Date posted February 18th, 2011
With life as busy as it has become, if you need to make a RRSP contribution or need a RRSP loan before this year’s deadline, we are happy to help. We offer a mobile service, we are happy to come to your office, home or local coffee shop. No need to fight traffic and wait in line to see your advisor or planner. We broker for many investment and loan providers in the convenience of your preferred location.
If you prefer we can meet you in our office as well.
We have many clients in the South Surrey, White Rock area and are happy to provide reference.
Should I take money out of my RRSP? Date posted February 16th, 2011
Taking money out of your RRSP (Registered Retirement Savings Account) can cause create a tax bill and loss of that RRSP room. So it is important to consider carefully before taking this step, however if done right it can be beneficial. RRSP is a tax deferral tool, eventually you will have to pay tax on the money, so if it makes sense to pay the tax now it can be a big win. Some of the reasons you may want to take money out or your RRSP and pay the tax now are;
- Home buyer plan, if it for a down payment on a home you may qualify to take the money from your RRSP, you will need to pay it back, however this is a way to get the funds without the tax issues.
- Life long learning Plan, if the funds are for your schooling this may offer an option to borrow the money without the negative tax implications. You will need to repay the funds once you are finished school.
- Low income year. If you have a low income year you may wish to take the funds out of the RRSP. This should be carefully consider as you give up that RRSP room, tax deferred growth of the funds and could owe taxes on the money. With all the drawbacks it can often make sense and leave you with more money long term.
- Just need the money. RRSP’s are not ideal for short term saving. If you choose to take money from your RRSP you may face fees, loss of retirement savings, and a tax bill. With all this if you need the money and the RRSP is the best place to get it then it may be necessary. To prevent this we should all have savings to draw from when unexpected expenses strike.
- Preparing for Retirement. Once you hit retirement you not only have income tax, but pension claw backs. For many moving from the RRSP.
When looking at making a withdrawal for your RRSP it is important to consider the negatives before making your decision, and discussing with a professional that understands your situation and the implications of the withdrawal is the best way to ensure you make the right choice.
- money out of the RRSP before retirement can make sense. This is usually the case when your income will be higher in retirement, or you have an offsetting deduction in the years you make withdrawals.
RRSP Beneficiary Designation Date posted February 15th, 2011
RRSP’s (Registered Retirement savings Plan’s) and all registered accounts (RIF, LRSP and other registered accounts) offer the ability to designate a beneficiary, seems simple enough, however there is a list of common and sometimes very expensive mistakes. Below I have listed a few of the common errors. It is simple to fix the beneficiary now, however your estate may or may not be able to correct it later.
No beneficiary designated – This means the RRSP goes to the estate, not to a beneficiary. This eliminates the tax benefits of leaving the accounts to your spouse, and also the creditor protection these accounts often have. It also means it can be contested with the will and in some cases be dealt with by the guardian trustee or a list of other negative issues.
Wrong beneficiary – A common example of this is in a divorce, where the beneficiary is not updated to the current spouse. This not only leaves the account to the wrong person, it also can leave the tax bill.
Out dated beneficiary – Often after marriage updating the beneficiary on an RRSP is not top of mind, but updating this is simple, if something happens correcting it later it can be a real hassle. I have heard of stories of the RRSP account accidently going to the ex wife and the tax bill paid by the current. Have yet to see this, and with good planning hopefully I never will.
Not naming a spouse – With RRSP’s a disabled dependant and the spouse can receive tax preferred treatment. The RRSP can roll over into the spouses RRSP with no tax issues on passing if they are named as the beneficiary. If anyone else is named the beneficiary the RRSP is taxed. It is normal for many people to want to put their children as the beneficiary. It is important to consider the tax benefits of leaving it to the spouse before choosing anyone else to be the beneficiary.
Beneficiaries can be on your RRSP, your work RRSP, pensions and many other accounts. I recommend that you review all your finances at least once a year, and that point check to ensure these details are all correct. It can make a big difference and save lots of money and stress later.
