No-Frills Investing by Deepak Shukla

Author:Deepak Shukla
Language: eng
Format: epub
Tags: saving money, money management, financial independence, early retirement, easy investing, etf investing, passive investing, lowfee investing, millennials investing, personal finance advice
Publisher: Deepak Shukla

NON-TAXABLE OR TAX-DEFERRED ACCOUNTS (RRSP/RRIF/TFSA/RESP etc):

- Registered Retirement Savings/Income Plans RRSP/RRIF’s

An RRSP is likely the most important vehicle available to Canadians to invest their savings on a tax-deferred basis. You can invest up to 18% of your earned income annually into your RRSP subject to a dollar maximum for the year. This is currently $27,230 (in 2020) and subject to periodic adjustment from time to time. The key features that make the RRSP an attractive place to hold your investments are a) the contribution you make to your RRSP is tax-deductible upfront. The higher your income, the more you can get back in tax-deductions especially as your income approaches higher marginal tax rates of around 43% and up in Ontario, which starts at an annual income of just under $100,000. The marginal tax rates vary depending on the province you live in Canada but the concept of higher tax deductions as your income and marginal tax rates increase, still applies. (b) Any income you make on your investments in the RRSP account is not taxable and there is also no tax to be paid on capital gains you make when you sell an investment in this account. Due to these tax benefits, the money invested in your RRSP grows and compounds faster. However, please do note that any withdrawals from your RRSP account are taxable at your marginal tax-rate at withdrawal time.

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