Using Your RRSP To Buy a First Home
Great article in the National Post by Garry Marr.
Canadians are allowed to take up to $25,000 out of their RRSP to buy a home. This means $50,000 per couple. This sum must be paid back to your RRSP over the next 15 years or penalties will apply.
For a young couple with a downpayment and room in their RRSPs they can make a $50,000 contribution to their RRSP ($25,000 each) and generate a tax refund a few months later of up to $20,000 ($10,000 each), assuming both people paying some income tax in the highest tax bracket.
The money deposited in the RRSP must be in the account for at least 90 days before being withdrawn to buy a house.
Bottom Line: A couple buying a home can leverage up their down payment for a home by contributing $50,000 to their RRSPs, generate a tax return of up to $20,000. Buy the home with a $70,000 down payment after waiting the 90 days before withdrawing from the RRSP and for the tax return to arrive.
Click here to view the article
What to do with TFSA Money?
Great new article by Jason Heath in the National Post. Answers the question of what to do with TFSA* savings accumulated so far, up to a maximum of $25,500 to 2013! Article advises on GIC’s , Bonds, Stocks, and associated ETFs. Practical and understandable advice for “twenty somethings”. Read on. Click here to access the article.
*The Tax-Free Savings Account (TFSA) does exactly what the name suggests: allows all Canadians, aged 18 or older, to save up to a maximum limit each year that is tax-free. Every young Canadian should have a TFSA. The current limit per year is $5,500.
“Quotes You Can Take to the Bank”
1. It is claimed that Albert Einstein, one of the greatest intellects of our time, declared that compound interest is “the most powerful force in the universe”
Photo by StockMonkeys.com
2. American financial author, Dave Ramsey once said, “I would not pre-pay. I would invest instead and let the investments cover it.”
Stock Market Prices Behave Like a Dog on a Leash
Photo: “Dog on a leash” by Chris Yarzab
No one seems to be able to accurately predict the short term movements of individual stocks. Why?
According to Andrew Hallam’s article “The enemy in the mirror” in the Summer 2011 issue of MoneySense:
The stock market is exactly like a dog on a leash. If the stock market races at twice the pace of business earnings for a few years, then it has to either wait for business earnings to catch up, or it will get choke-chained back in a hurry. But a rapidly rising stock market can cause people to forget that reality: they pile larger and larger sums into stocks with delusional confidence.
Click here to read the full article on the MoneySense website.
Invest to achieve your lifestyle goals, not to become ‘rich’
Before you start to think about investing your money, please take the time to read a short but very interesting article by Australian investment specialist Kajanga Kulatunga. In the article he questions the role media organisations have in scaremongering
“The problem gets accentuated by a 24-hour news cycle, focused on pushing bad and negative news over the quiet successes”
and the effect this has on our outlook and investment behaviour
“During good times the market is constantly roping investors in with the lure of easy money.”
You should understand why you want to invest your own money. To save for retirement? For your children’s education? Investing should not been seen as a way to make a quick buck but rather to increase your savings for the kind of lifestyle you want to have for yourself in the future.
“Think in terms of the safety net it provides, the standard of living it affords, and specific accomplishments you’d like to ensure”
Click here to read article.
Pay Yourself First
A priest announced to his congregation: “I have good news and bad news. The good news is we have enough money to pay for our new building program. The bad news is it’s still out there in your pockets.” The same could be said about a savings account or buying investments. The opportunity is there. You just have to be willing to part with some of your hard earned cash. For young people starting out in their career, saving or investing might seem like something their parents do. However, putting a small amount of money into a savings or investment account each month at the beginning of your career could turn into a large pot of cash over time. To learn more, download our YWG app and learn more about paying yourself first.
Click here to download YWG on the App Store!