How much do you put into RRSP's each month?
02-27-2004, 11:34 PM
#61
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RRSPs like everything else in this world have trade-offs associated with them. They are a good vehicle for tax free growth and can help you pay the government less income taxes. You can also use your RRSP for mutual funds (and you can choose the risks), capital gains or losses are not recognized like they are with mutual funds. Setting up a monthly RRSP contribution is a convenient way to save for retirement, and lets face it we should be retired for (hopefully) more years than we work so this is important. Plus CPP will be lucky to make it another 10-15 years nevermind 40-50 years.
Company/govt pension plans are great, but you should not put all your eggs in that basket. Diversification is an important part of this equation, and you should mix your investments. The whole personal finance thing can be fairly confusing, and this is why so MANY people are in this field (pretty soon banks might as well be insurance companise). RRSPs are a convenient and easy way for people to save for retirement and in that aspect they are very suitable vehicle for savings. However, everyone should have a financial advisor unless they practice this area.
As for no contributions if your income is under $30k, I suppose that could be because you can always carry forward your unused RRSP contributions, plus at under $30K you probably won't derive much benefit from the tax savings. I'm not expert on this so take it with a grain of salt. But lots of info available on the net and financial advisors aren't exactly hard to find these days!
Company/govt pension plans are great, but you should not put all your eggs in that basket. Diversification is an important part of this equation, and you should mix your investments. The whole personal finance thing can be fairly confusing, and this is why so MANY people are in this field (pretty soon banks might as well be insurance companise). RRSPs are a convenient and easy way for people to save for retirement and in that aspect they are very suitable vehicle for savings. However, everyone should have a financial advisor unless they practice this area.
As for no contributions if your income is under $30k, I suppose that could be because you can always carry forward your unused RRSP contributions, plus at under $30K you probably won't derive much benefit from the tax savings. I'm not expert on this so take it with a grain of salt. But lots of info available on the net and financial advisors aren't exactly hard to find these days!
02-28-2004, 02:18 PM
#62
50 Watt CAFz'r
Join Date: Jun 2003
Posts: 372
Originally posted by RougeDude:
RRSPs like everything else in this world have trade-offs associated with them. They are a good vehicle for tax free growth and can help you pay the government less income taxes. You can also use your RRSP for mutual funds (and you can choose the risks), capital gains or losses are not recognized like they are with mutual funds. Setting up a monthly RRSP contribution is a convenient way to save for retirement, and lets face it we should be retired for (hopefully) more years than we work so this is important. Plus CPP will be lucky to make it another 10-15 years nevermind 40-50 years.
Company/govt pension plans are great, but you should not put all your eggs in that basket. Diversification is an important part of this equation, and you should mix your investments. The whole personal finance thing can be fairly confusing, and this is why so MANY people are in this field (pretty soon banks might as well be insurance companise). RRSPs are a convenient and easy way for people to save for retirement and in that aspect they are very suitable vehicle for savings. However, everyone should have a financial advisor unless they practice this area.
As for no contributions if your income is under $30k, I suppose that could be because you can always carry forward your unused RRSP contributions, plus at under $30K you probably won't derive much benefit from the tax savings. I'm not expert on this so take it with a grain of salt. But lots of info available on the net and financial advisors aren't exactly hard to find these days!
RRSPs like everything else in this world have trade-offs associated with them. They are a good vehicle for tax free growth and can help you pay the government less income taxes. You can also use your RRSP for mutual funds (and you can choose the risks), capital gains or losses are not recognized like they are with mutual funds. Setting up a monthly RRSP contribution is a convenient way to save for retirement, and lets face it we should be retired for (hopefully) more years than we work so this is important. Plus CPP will be lucky to make it another 10-15 years nevermind 40-50 years.
Company/govt pension plans are great, but you should not put all your eggs in that basket. Diversification is an important part of this equation, and you should mix your investments. The whole personal finance thing can be fairly confusing, and this is why so MANY people are in this field (pretty soon banks might as well be insurance companise). RRSPs are a convenient and easy way for people to save for retirement and in that aspect they are very suitable vehicle for savings. However, everyone should have a financial advisor unless they practice this area.
As for no contributions if your income is under $30k, I suppose that could be because you can always carry forward your unused RRSP contributions, plus at under $30K you probably won't derive much benefit from the tax savings. I'm not expert on this so take it with a grain of salt. But lots of info available on the net and financial advisors aren't exactly hard to find these days!
Put it this way.
If you make 30k your going to lose a percentage of it to taxes. We'll use 20% to make it easy. Forget about other deductions and just focus on tax and gross income. Now your 30,000 is 24,000. You now have 24K to live off and invest. Now say you use an RRSP. You have 10% put into an RRSP before you pay tax. Now you have 3000 in an RRSP and a 27,000 taxable income. The government takes there 20% and you are left with 21,600. If you add the 3000 in your RRSP's then your total is $24,600 compared to your total of 24,000 even without the RRSP. You just saved yourself 600, plus you have the 3000 earning interest all year long. Where as the other way you don't. Now if your one of the people who waits until tax season to make their contributions you will still get the same tax break as the guy who contributed equally all year but you will miss out on that year of compound interest.
The moral of the story is that no matter how you look at it RRSP's are a great way of growing your money. Even if you don't make enough to save any taxes you still get the benefit of the compound interest that goes along with your invest. Mind you, you still would have that compound interest should you chose to invest outside of an RRSP. So I guess the biggest benefit is the tax break but having an RRSP or any investment where a portion of your income is automatically deducted and applied to an investment is the easiest and most effective way of saving your money. I have been having monthy deductions taken off my paycheque for almost 3 years. I do not notice or think of it. Now a have a nestegg larger than I could have imagined for such a short period of time. Had I not gone the route of automatic deductions I know I probably would have spent it and have little to nothing to show for it.
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