- Joined
- Aug 30, 2007
- Messages
- 13,879
Do you have an RRSP ? if not, why not ? If not maximized, why not ?
Do
you pay income taxes ? What is your marginal tax rate ? For most
Canadians it is well over 30% and for many it is over 40% ! Therefore,
if you put money in an RRSP the government sends you a refund of
slightly over 40% if you are in the highest marginal tax bracket !
So,
if you put $25,000 in an RRSP you get a cheque for over
$10,000 ! Thus, your net investment is only $15,000 ! You invest $15,000
and it is worth $25,000 ! A 66%+ return ... in a few weeks if you do it in late February of a year.
If you
are in a 33% tax bracket, and you put $15,000 in an RRSP you
get a cheque for about $5,000 ! Thus, your net investment is only
$10,000 ! You invest $10,000 and it is worth $15,000 ! A 50%+ return in a
few weeks.
Wow .. free money .. "on the house" care of the
Canadian government ! No other investment gives you such a high risk
free return. NONE !
Then you can invest your RRSP tax free until you take it out. Most Canadians pay less taxes in retirement than when they are working, i.e. this tax deferral strategy and tax reduction strategy works for most Canadians except a few that anticipate they have higher incomes in their 60's to 80's then when working at full throttle in the 30's to 50's.
That's why it is prudent to maximize your
RRSP contributions, as you get significant free money today, and delay
the repayment of it, via taxes on taking it out of your RRSP eventually,
for years or even decades !
Once the money is in the RRSP
account, you can then decide how to invest it.
For most Canadians, investing in or
participating in real estate can be done inside their RRSP, however
there are some restrictions. Either way, inside or outside an RRSP ,
investing in the right real estate can pay excellent long-term dividends
` if invested wisely !
Three broad options exist to participate in real estate within your RRSP !
Option 1: Mortgages or Mortgage Investment Corporations (MICs).
Option 2: Publicly traded stocks that invest in real estate or REITs.
Option 3: Private firms that invest in real estate.
Of
course, always, always consider return OF capital before you consider
return ON your capital when evaluating any investment option !
Do
you pay income taxes ? What is your marginal tax rate ? For most
Canadians it is well over 30% and for many it is over 40% ! Therefore,
if you put money in an RRSP the government sends you a refund of
slightly over 40% if you are in the highest marginal tax bracket !
So,
if you put $25,000 in an RRSP you get a cheque for over
$10,000 ! Thus, your net investment is only $15,000 ! You invest $15,000
and it is worth $25,000 ! A 66%+ return ... in a few weeks if you do it in late February of a year.
If you
are in a 33% tax bracket, and you put $15,000 in an RRSP you
get a cheque for about $5,000 ! Thus, your net investment is only
$10,000 ! You invest $10,000 and it is worth $15,000 ! A 50%+ return in a
few weeks.
Wow .. free money .. "on the house" care of the
Canadian government ! No other investment gives you such a high risk
free return. NONE !
Then you can invest your RRSP tax free until you take it out. Most Canadians pay less taxes in retirement than when they are working, i.e. this tax deferral strategy and tax reduction strategy works for most Canadians except a few that anticipate they have higher incomes in their 60's to 80's then when working at full throttle in the 30's to 50's.
That's why it is prudent to maximize your
RRSP contributions, as you get significant free money today, and delay
the repayment of it, via taxes on taking it out of your RRSP eventually,
for years or even decades !
Once the money is in the RRSP
account, you can then decide how to invest it.
For most Canadians, investing in or
participating in real estate can be done inside their RRSP, however
there are some restrictions. Either way, inside or outside an RRSP ,
investing in the right real estate can pay excellent long-term dividends
` if invested wisely !
Three broad options exist to participate in real estate within your RRSP !
Option 1: Mortgages or Mortgage Investment Corporations (MICs).
Option 2: Publicly traded stocks that invest in real estate or REITs.
Option 3: Private firms that invest in real estate.
Of
course, always, always consider return OF capital before you consider
return ON your capital when evaluating any investment option !