chrichri

RRSP VS TFSA

RRSP- : save on income tax if you are working.
tax shelter for investment in rrsp
mostly use for retirement planning, first time home buyers plan (hbp) and lifetime learning (LLP)

When you withdraw money for any other purpose, you pay tax penalty.

TFSA: interest or earning in the account is tax free, but doesn't help you to reduce income tax.
no service charge.... you can withdraw it anytime without tax penalty.
MORE for regular savings....
max 5000.00 contribution limit for per year.
any unused contribution can be carried forward to next year.
withdrawal amount can be also carried forward to next year.

i recommend both.

chrichri

原帖由 fibbi 於 2009-2-19 16:00 發表
I would prefer to put in RRSP first, because of the tax return. Then use the tax return to put in the tax saving account.
RRSP is not as flexible (not supposed to withdraw until retire) but at the sa ...

i agree... but i would say it is better to open both rrsp and tfsa...

a lot of people don't want to buy rrsp because they don't want to come up with a large lumpsum during the tax period to purchase rrsp. i always recommend people to put away 100.00 for a monthly contribution in rrsp and tfsa or split 50 and 50... and use the tax refund to put it in tfsa.

tfsa is similar to regular savings account. the only difference is you can only contribute 5000 per year. no service charges for withdrawal. withdrawal amount can only re-contribute in the account until next year once you reach 5000 contribution limit.

chrichri

原帖由 小叻 於 2009-2-19 18:14 發表
完全唔明 >< 我都俾左兩年稅啦~ 之前有人同我講唔好買RRSP所以無買過~ 我數口麻麻~ 但要大拿拿羅$10000出黎買RRSP又好似貴左D wor~
稅先至係2600之麻 ??

If your income tax is only 2600, i don't think you need to purchase 10000.00 in rrsp. If you have T4 now, you can use quicktax or ufile to calculate how much you rrsp you need to purchase in order to save on taxes..
With quicktax or ufile, it will tell you how much you need to purchase in order to get a tax refund. BOth software don't charge a penalty until you actually e-file your tax return

www.quicktax.ca       or      www.ufile.ca

chrichri

原帖由 小叻 於 2009-2-19 19:17 發表
上網查左~ 如我比$2000 落RRSP﹐ tax saving = $650﹐ 係咪即是今年要俾既稅 ex. 2600 減 650 = $1950 呀?

the software will tell you if it is tax owing or tax refund

if your income tax is 2600 shown on your t4, i think you will get a tax refund by purchasing rrsp.

chrichri

原帖由 快樂牛郎 於 2009-2-21 23:46 發表
頭先手痕隨便計下一個簡化既scenario

ROI:  4.5% per year
Salary: 50,000 at age 25, 8% increase per year from age 25 to 35, 4% per year afterwards (this is reasonable after promotion and bonus is consid ...

well... if you don't buy rrsp, you are paying the gov't, not urself. If you buy, you can have tax savings/refund and the savings is yours. Within RRSP, you can choose from wide range of products, savings acct, stock, term deposit(GIC) and mutual funds. I don't see any comparison btw RRSP and Lehman Brothers. Within GIC or savings acct, money is guaranteed up to 100000 through CDIC with most Financial institution. Plus investment/ interest in rrsp is tax shelter. When you have rrsp, once you turn 71, it will change to RRIF. At that time, you have to withdrawal minimum required amount every year, but it is still better than just relying on CPP or OAS. Even though you have other non-registered investment, you basically get a T5 at the end of the year to report it as your taxable earning.

Some people talk about inflation rate or whatever, but i just don't see any harms doing rrsp if you are earning middle to high income.

chrichri

with rrsp, maximum amount you can contribute to an RRSP is 18% of last year's income or your limit on your NOA(notice of assessment), but for starter, you can contribute as little as $25 or set up a monthly contribution amount as much as you want.

i think getting a tax refund/tax savings is better than having to pay tax after you file tax.  well, i know people may not want to think about retirement that early, but if you haven't purchased a home yet or will consider buying your 1st one, i would say it is good investment and savings for you.
your tax refund plus investment in rrsp is tax shelter will help you when you need to use it to buy your 1st home. Hope the information is helpful.

Deadline is coming on Mar 2.09-- i will consume a lot of people will be rushing in to banks at the last min

chrichri

原帖由 Nam 於 2009-2-25 19:33 發表
Thanks Little Prince.

Well, initially, I didn't lock my RRSP. It was a high interest flexible RRSP account.
Then GIC was doing promotion, lock 1.5 years for 3.7% interest rate.  I didn't expect the ...

most of FI's would allow you to cash non-redeemable RRSP GIC if you are participating in HBP (first time home buyer purchase plan) or LLP (Life Learning Plan) with interest paid up to your withdrawal date. I would suggest you check with your FI's.

And for HBP.. Yep. you have 15 yrs to repay for your rrsp after you withdraw the money. The limit is 25000 as of 2009 federal budget plan.
as far as i know, you don't have repay money in the 1st year, so it will be 16 yrs.
I would  the interest rate for non-redeemable RRSP GIC is much higher and your 3.7 % is really good interest rate. i am sure you will not able to get the same interest rate right now at 3.7 for 1.5 yrs.

also, keep in mind that if you do need to withdraw money from rrsp for HBP, the $ has to stay in the rrsp acct for 90 days

chrichri

原帖由 Littleprince 於 2009-2-25 21:50 發表

無野安全過 GIC 窩。。。所謂 GIC 就是 Guaranteed Investment Certificate﹐即係話政府有 CDIC 保障到 $100﹐000 每個戶口﹐就算銀行關門你都拿得回錢﹐你話係咪安全﹖當然更靈活的就是普通儲蓄戶口喇﹐但利息可能只得 0。1%  ...

totally agree with about earning btw GIC and money market fund right now. In money market fund, you can lose money or earn a few %, but within GIC, your principal is guaranteed and also the interest payment.

It really depends on what your investment horizon, risk tolerance and investment objective. If you want 100% safety, money market mutual fund and GIC will be better. Money market fund gives you more flexibility and lower minimum balance required. It is also subject to market fluctuation and future performance is not guaranteed. rate of return fluctuates...
vs.

GIC- You can choose from redeemable or non redeemable, redeemable gic is around 0.75 to 1.xx around all FI's. It is usually cashable after the first 30 days. interest rate, interest payment amount and principle are guaranteed. Non-redeemable gic can range from 30days to 5 or more years.  the longer you locked in, the higher interest rate they will pay. you can expect up to 4% per year if you choose sth like 5 yrs term..only cashable on maturity date with interest payment. also, you can choose to take the interest payment from semi-annual or annual with some FI's.

chrichri

my suggestions here will be:

have a savings acct for regular savings -- regular savings acct allow you to do withdrawals and deposit at bank machines or tellers.
interest rate varies. interest earned is your taxable earnings, but gives you daily access

also have a tax free savings account- max contribution is 5000.00---accessible mostly through online, telephone banking or at branch, but not atm
withdrawal amount and unused contribution can be carried forward to next year

rrsp- if you are paying tax or in middle-high income tax bracket.
so you can save on your income tax

pay off your credit card balance first or consolidating your debt if you have any --- through personal line of credit cuz the rate is usually lower
even though you don't carry credit card balance, have a PLC to use for emergency fund or back up.

For credit card, use the one that suit you the most. lower interest rate vs. points vs. cash back vs. no fee vs....

just my 2 cents...  again, just for sharing