|
sweetie_michelle
|
read my profile
sign my guestbook
Name: Michelle
Country: Canada
Birthday: 4/7/1984
Gender: Female
Interests: eat, sleep, watch movies, day dreaming......
Occupation: Student
Industry: Other
Message: message me
Member Since:
3/27/2003
|
|
| Finance tidbit of the day: RRSPs - Registered Retirement Savings Plan.
A friend recently asked for my professional advice on these, so I thought I'd write a little (well, not so little now) blurb. And also would like to share what I have learned for the past few months in this industry.
An RRSP is an investment vehicle that Canadians can use. You don't pay tax on the money you put in (ie you get a tax deduction), but you will be taxed at 100% of your marginal rate when you pull out.
Good: anything inside an RRSP grows and compounds TAX-FREE. Yeh~
Bad: 100% marginal taxation upon withdrawal isn't that fun, especially if you want to pull out large amounts when you're older. For example, if you are in a 40% bracket and you decide to pull out $10000 in a given year, the government will take a $4000 cut and only $6000 actually goes to you. Now there ARE strategies that can be done (ask me if interested) to artificially CREATE tax deductions so you get a bigger slice of the pie, and not to mention a bigger tax refund up front. And yes it's legal, pretty much all (if not all) wealthy people use this or a similar strategy among others.
Good: You can pretty much dump anything (stocks, bonds, GICs) into an RRSP. An RRSP itself is not a thing you can "buy", all the letters mean is that it's given tax-preferred status by the government. Think of it more as a special shopping cart. Things you cannot dump into it is commodities (precious metals, gems), and real estate, to name a couple, though some of this will change. There is also a foreign content rule, though the Finance Minister has proposed this rule be scrapped.
Bad: Yes there are limits to how much you put in (the government isn't stupid). But most people don't hit the limit though. Another adviser told me that if you make more than $37.4k this year (2005), you should max out your RRSP. He used some formula based on interest rates and inflation, but I have no idea what it is. The way I see it, if you're paying taxes, why not find out how to legally reduce it? Oh, and if you make LESS than 37.4k, that doesn't mean you shouldn't do any RRSPs, it just means you may not want to max it out. But RRSP or non-RRSP, you can't go wrong with any kind of long-term investment.
Good: If you reinvest your tax refunds, you come out even farther ahead. You can dump it back into an RRSP and create more tax deductions, though if you're maxed out there are other things you can legally do as well.
Bad: You can't hold an RRSP forever. Many people don't know that RRSP accounts must be converted into something (annunity, RRIF, won't describe them here) by December 31 of the year in which the owner turns 69. If you don't, the government considers your entire account to be income for that year, so imagine if you invested well up to 69 and the tax people decide that you "made" $1m this year because that's what your account balance was on December 31. When they're done with you it won't be even close to a million anymore. Normally I recommend anybody who is 55+ to use some sort of strategy to start getting that money out!
Good: For couples where one person makes significantly more than other, a spousal RRSP can be opened, where one person (the contributor) dumps his/her own money into the other person's (the annuitant) account. The contributor gets all the tax deductions in this case. This is a simple but very effective way to chop down the taxes, since the person who pays more tax will naturally benefit more from the tax deduction.
Like any investment vehicle, an RRSP is only a tool. A tool is only good and useful if the user knows how to use it properly! If you are still unsure about how they work, and want to understand WHY and HOW to use them properly, just give me call :) | | |
| "You are part of my existence, part of myself. You have been in every line I have ever read. You have been in every prospect I have ever seen - on the river, on the sails of the ships, on the marshes, in the clouds, in the light, in the darkness, in the wind, in the woods, in the sea in the streets. You have been the embodiment of every graceful fancy that my mind has ever become accquainted with. The stones of which the strongest London buildings are made are not more real, or more impossible to be displaced by your hands, than your presence and influence have been to me, there and everywhere, and will be. To the last hour of my life, you cannot choose but remain part of my character, part of the little good in me, part of the evil. But in this separation, I associate you only with the good, and I will faithfully hold you to that always, for you must have done me far more good than harm. Let me feel now what sharp distress I may."
Great Expectations - Charles Dickens | | |
| It's almost 1 30 am. want to study, but can't. want to sleep, but can't either. just talking to one of my old buddies, haven't talked to him for a long time. it's funny that we all started the same, but our lives are going different directions. we have different friends now. it's even hard to see him even we live about 5 minutes away. if u r reading this right now, buddy, i'm happy for u for whatever you have done, and you are doing. you are still one of my best friends that i have ever met.
another thanksgiving just passed. it's a sign that xmas is coming. the year has past so fast. i still remember what i did a year ago. the enviorment never changes, it's the people around it that's changing. i am thankful that i have met a lot of friends. no matter if u r just an aquitance, or a real friend, i wouldn't have gone through all these without you guys. | | |
| It's this time of the year again. Autumn has officially come, leaves are losing their brightly green and falling down from their mother trees. Grops are harvesting, that's why in China, the first full moon of autumn is the celebration of a whole year's hard work. When I was a child, the only thing I am happy about today was because we get half day off from school, and more importantly, we get to eat mooncakes. I never liked mooncakes that much. They are really big and I can not finish them. Whenever this day comes up, we will always have tons of mooncakes lying around till they went back. Nobody wants to touch them. But for some reasons, i miss them a lot now. I guess it is not really the mooncakes that I want to eat, but the meaning in it. I can't remember when was the last time my family spent this day together. For the past 20 years, All I can remember was 3 or 4 times... and I don't know when will be the next time. Why is it always true when the things you have, you never know how to appreciate it, and when it's gone, you know it's too late...
Went to QE park to watch the moon, and to feel the atomaspher of the mid-autumn day. The moon was bright, round, and far far away... Many people who are away were watching the moon together with their families, the only difference is, they are on the other side of the earth. I finally understood the poems I read long time ago... hope everything lasts forever... no matter how far apart we are... | | |
| Tuesday morning, another ordinary start for another ordinary day. My roommate is still sleeping. I don't know why she sleeps so much. Living in the Frat house is not as exciting as you guys think, it's just an ordinary dorm. It's been a month since I moved in. My room is still packed with all the boxes, and random stuff. I wish I can clean it up, but it's not just mine. I have no desk because my roommate took it over. My box and my floor is my new desk.
So many things have changed this summer. I have become a professional party girl again. Am I really trying to enjoy or am I escaping? Escaping from what? So many questions I am asking myself. But they can never be answered. | | |
|
