February 3rd, 2012 by
young
Deadlines are looming again (FYI if you didn’t know it is February 29, 2012) for your contribution to be counted towards the 2011 tax year.
I’m curious to know (you know, because I’m nosy like that), for those that contribute to an RRSP, when do you contribute?
Do you contribute in a lump sum in early 2011?
Do you contribute throughout the year in 2011?
Or do you wait until the first two months of 2012 to put in that big chunk of change in?
What I do (and there’s no rhyme or reason or method to my madness) is I contribute a set amount per month and then if I have room left over, I’ll contribute a lump sum to max out my RRSP afterwards. After I finish paying back my Home Buyer’s Plan, I’ll likely stop contributing to my RRSP’s (unless I have oodles and oodles of money after contributing to my TFSA already) since I plan to have a defined benefit pension plan. However, who knows, I might be desperate to decrease my taxes in which case I’ll probably contribute to an RRSP as well.
Speaking of RRSP’s, I had the lovely opportunity to talk to Bryan Borzykowski from Moneysense.ca (I idolize Money Sense so it was pretty awesome to be mentioned in it) and he interviewed me about my strategy for my RRSP’s.
Here are some RRSP posts that might pique your interest in case you’re not sick of seeing RRSP stuff just yet.
Have a fantabulous weekend!
Pf Blog Love
February 7th, 2011 by
young
There has been a lot of talk about which one is better, the RRSP or the TFSA in both the PF blogosphere and the media. Both are great tools for saving for us Canadians. Given that it’s a fresh year (and almost time the RRSP contribution deadline for 2011- March 1, in case you forgot), more people are thinking about the TFSA and the RRSP.
In an ideal world, one could max out both the RRSP and the TFSA. That would be ideal. Though in the real world, life happens, and it is oftentimes very difficult to be able to scrounge up the money (without having to sell a kidney on the black market-kidding!) to be able to max out both the RRSP and the TFSA.
In my opinion, the RRSP and the TFSA are like siblings. Very different siblings. Almost mirror opposites and the inverse of each other. They both compete for your money and attention. They are both good, but as we all know, one can be better for you than the other, just like parents really do have a preference of one sibling over the other, but they just don’t say it aloud (uh oh, is my middle child syndrome coming out in my post?! Sorry about that).
So let’s talk about the RRSP first (the older sibling):
The Basic Lowdown on the RRSP:
- The RRSP was introduced in 1957 (yeah, it’s the really old sibling)
- As detailed in my RRSP post, the RRSP can hold a number of things (including GIC’s, stocks, mutual funds, bonds); it’s like a basket of investments sheltered from tax
- Contributing to the RRSP is with PRE-TAX income (the tax refund you get is your pre-tax money, but given to back to you at a later date)
- You will have to pay tax eventually when you take money out of it- it’s a tax deferral program (the hope is that when you take money OUT of the RRSP, you’ll be low income aka retired, so there won’t be as much income)
- You are supposed to contribute to it to reap the tax deductions when you’re at a higher tax bracket, and take it out when you are at a lower tax bracket.
- There are two options where you are allowed to borrow money from your own RRSP: 1) Home Buyers Plan and 2) Lifelong Learning Plan (with both you are expected to pay back 1/15 and 1/10 respectively, of the amount you borrowed per year until its fully paid)
The Lowdown on the TFSA:
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December 20th, 2010 by
young
Way back when, I had talked about how one can use the RRSP for the Home Buyers Plan. Having bought my first home recently, I found the home buyers plan information on the Canada Revenue Agency website a bit difficult to understand (must be all that government lingo), so I thought I would simplify it in easy to understand terms and spell it out step by step on how take advantage of the HBP.
First off, in case you haven’t heard of the Home Buyers Plan, I’ll try to explain it.
It’s where a first time home buyer (you and whoever you buy the home with) can each withdraw up to $25,000 from your RRSP tax-free. The caveat is that you have to repay it within 15 years, following the second year after the home is bought.
e.g. if you buy the home in 2010, you will have to start repaying the Home Buyers Plan withdrawal in 2012.
Conditions in order to be eligible for the HBP plan:
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Hope everyone’s having a great weekend so far. It’s beautifully sunny here in Vancouver and I can’t wait to get outside to enjoy some of that rare sunshine.
I finally got my act together and signed up for a self-directed RRSP Questrade account. I’m transferring over the BMO investorline RRSP account to Questrade. I found that I was hesitant to rebalance my portfolio in the BMO Investorline account because of the $29 trading commissions. Also, I was getting sick of paying the $100 yearly administration fee (that the guy neglected to tell me about when I signed up a few years back) that they charge if your portfolio is less than $25,000. I’m not even allowed to contribute more than $25,000 in RRSPs because of the pension adjustment I get. I should have done this a long time ago, oh well- hindsight is always 20-20, right?
LOL I might as well change my middle name to Questrade. I now have a non-registered margin account, a TFSA account, and an RRSP account with them. You really can’t beat the $4.95 trades.
And the winner is…
youngandthrifty.ca had a giveaway of the book “Enjoy Your Money; How do Make It, Save It, Invest It, and Give It” by Steve J. Miller. I used random.org and drew the winner of the book giveaway.
And the winner is….Kevin! From Financiallypoor.com. Congrats, Kevin!
Some weekend Links:
December 9th, 2009 by
young
Now we want to think OUTSIDE the box (aka RRSP).
What should we keep outside of the RRSP or Tax Deferred Shelter?
Well, after you maximize your RRSP’s and TFSA, then you can keep investments in the “spillage”
Basically you want investments that are the least “taxing” to you, to keep outside of an RRSP.
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