By 2 Cents on February 16th, 2010 | Category: Planning | Today, there are three kinds of people: the haves, the have-nots, and the have-not-paid- for-what-they-haves.
~ Earl Wilson
RRSPs work best for the haves. The have-nots might be better off starting with TFSAs, and the have-not-paid-for-what-they-haves should pay down debt first. That would pretty much sum up my general view of using RRSPs. I recently did a telephone interview with LuAnn LaSalle of the Canadian Press on the topic, but I’m so much more coherent in writing.
LuAnn was kind enough to print what I said anyway, and the Canadian Press article did a great job of getting people to question the wisdom of contributing to an RRSP every year no matter what. Even David Chilton, author and retirement savings advocate, feels like debt is the biggest problem in personal finance right now. It seems like this is a question that a lot of [...]
Read on and enjoy … RRSP vs. Paying Down Debt
By 2 Cents on February 2nd, 2010 | Category: Planning | The inability to make a decision has often been passed off as patience.
~ Author Unknown
At this time of year, many Canadians are trying to figure out where to put their savings in order to reap the greatest tax and long term investment advantage. With the introduction of TFSAs, that decision has been complicated a bit. There has been great debate over which are the best investment vehicles to choose for your TFSA and whether RRSPs are a better retirement savings option.
The C.D. Howe Institute recently released a study entitled Saver’s Choice: Comparing the Marginal Effective Tax Burdens on RRSPs and TFSAs. As we noted in RRSPs: Who Needs Them?, the cardinal rule of RRSP investing is that they work best if your marginal tax rate when you put the money in is higher than it will be when you take it out. The [...]
Read on and enjoy … TFSA vs. RRSP Duel: Who Wins?
By 2 Cents on February 1st, 2010 | Category: 20 Cents | This is a list of 10 articles from January of 2010 that I thought you might find interesting. Go ahead and browse some of these websites if they are new to you and you’re certain to find a lot more great information. Enjoy!
Pop Economics had a great post asking What Investment Return Should You Plan For? I very much agree with the analysis here, as I think the conventional wisdom of 7% – 10% returns is way too optimistic, especially given the challenges we face in the near term with global debt levels where they are. Manage your risk, control what you can, and be careful what numbers you enter in those retirement calculators! Byron Wien is a seasoned expert who is often tagged with the “legendary” moniker, so a lot of people listen to what he has to say. The fact that he’s [...]
Read on and enjoy … 20 Cents from January 2010
By 2 Cents on January 29th, 2010 | Category: Book Reviews | People on commission cannot be trusted.
~ David Trahair, Enough Bull, p. 121
This book came out in August of 2009. By that time, the market tailspin had finally subsided and many investors have since felt comfortable diving back into the investment pool. David Trahair would probably advise against that.
This book was billed as “the one book your bank really does not want you to read”. When you understand Mr. Trahair’s position, you can see why. Many of the ideas he proposes in this book would be considered sacrilegious in many circles, including some parts of the personal finance blogosphere, and of course, the financial services industry.
My first impression was that Mr. Trahair’s views were a little too extreme and that the book probably wouldn’t even have been published if it weren’t for the panic instigated by the financial crisis of 2008-2009. The thing is, [...]
Read on and enjoy … Book Review: Enough Bull
By 2 Cents on January 28th, 2010 | Category: Retirement | Life is not long, and too much of it must not pass in idle deliberation how it shall be spent.
~ Samuel Johnson
Our series on RRSP Basics continues today with some information on how and when to take money out of your RRSP.
Withdrawing Money Before You Retire
The idea behind RRSPs is that you won’t be taking any money out until you retire. But as we all know, life happens. Here’s how it works if you encounter an emergency where you absolutely need to take some of your money out:
Any money you take out of your RRSP will be added to your income at your marginal tax rate in the year you withdraw it. Your withdrawal will be subject to a withholding tax which will be deducted by your financial institution. The withholding rates for Canadian residents are as [...]
Read on and enjoy … RRSPs: Taking Money Out
By 2 Cents on January 26th, 2010 | Category: Retirement | The road leading to a goal does not separate you from the destination; it is essentially a part of it.
~ Charles DeLint
Yesterday we began a series on RRSP Basics with a primer on what an RRSP is and who should use them. Today, we’re going to look at where you can get them, what you can put in them, and how to decide what you should put in them. There are a few types of RRSPs that you can get:
Basic: These are usually provided through an advisor affiliated with a mutual fund dealer or bank who offers advice on where to invest your money. Self-Directed: These [...]
Read on and enjoy … RRSPs: What Should You Put in Them?
By 2 Cents on January 25th, 2010 | Category: Retirement | Warning: Dates in Calendar are closer than they appear.
~ Author Unknown
Registered Retirement Savings Plans (RRSPs) were introduced by the Government of Canada in 1957 as a means of encouraging Canadians to save for retirement. That need has only grown over the decades as corporate pensions have been cut and the number of companies matching contributions has dwindled.
Many pension plans took a huge hit when the stock market fell in 2008 and 2009. Although they have since recovered a lot of their losses, the crash reminded us that money in the stock market is money at risk.
To make matters worse, Canadians have been saving less, taking on more debt, and keeping that debt on their balance sheets for longer than in the past. In October of 2009, The Globe and Mail ran an excellent series entitled Retirement Lost which outlined many of the [...]
Read on and enjoy … RRSPs: Who Needs Them?
By 2 Cents on January 11th, 2010 | Category: Planning | Map out your future, but do it in pencil.
~ Jon Bon Jovi
Well, after the last 2 years, my pencil is 2 centimetres long and my eraser – well, let’s just say I have a new one. Budgeting and goal setting have been a real challenge recently for reasons outlined in Our Money Story (Part I & Part II) last week. Still, that hasn’t kept me from trying, and sometimes failing.
I normally might have finished my 2010 list of goals some time in December in years past. This year, I just couldn’t do it. There seemed to be too many uncertainties surrounding 2010, and frankly, after 2008 and 2009, I was afraid to write anything down because I was pretty sure all my plans would eventually get scrapped anyway.
But as sure as flowers in springtime, my annual New Year’s burst of energy [...]
Read on and enjoy … Our 2010 Financial Plan
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