Individual Pension Plan:
If you are a key executive of company, and owner-manager or a self-employed professional an Individual Pension Plan (IPP) may be the most tax effective way you have of creating a pension for your retirement. This strategy takes full and legitimate advantage of the Income Tax Act to create the maximum wealth for your retirement income.
Registered Retirement Savings Plan:
RRSP contributions to your own savings plan for your retirement are tax deductible, with both the contributions and the investment earnings taxable on withdrawal. The government established this strategy in 1957 to encourage people to save for their retirement with the realization that government funded pensions would not be adequate. In spite of this encouragement we find that only about 20% of Canadians use this program. You may begin to contribute any year that you have an income and continue up until the end of your 71styear.
Inside your RRSP you can invest in a very wide range of investments, we have access to those investments and can help you select a category that is most beneficial to your own future plan.
Tax Free Savings Accounts:
A second attempt to have Canadians save money is in this new program (January, 2009) called a Tax Free Savings Account (TFSA). Contributions to your plan are made from after-tax income, with both the contributions and the investment earnings exempt from tax upon withdrawal. Like the RRSP there are a wide range of investments available. If you are taking full advantage of the RRSP savings plan, your next savings dollar may be best invested in a TFSA. Up to $6000 per year can be invested in 2020. Check with us to learn about your cumulative totals. Unlike the RRSP, money in the TFSA can be withdrawn at any time without penalty.
After the recent downturn in the financial markets many investors have wondered if there are investments that can protect them from major corrections in the market. Segregated funds are such an investment. They are similar to mutual funds but have unique features, one of which is a guarantee of part or the entire principal. By agreeing to hold the investment for a specific period of time (usually 10 years) you will receive a guarantee to return all or part of your principal even if the fund loses value because of poor market performance.
Segregated funds can only be purchased through insurance companies and as you might suspect there is an insurance component. This means that should you die the capital you have invested will be paid to your family. This protects your family from losing your assets due to poor market performance. The insurance companies further protect the assets in segregated funds by having them separate from the companies themselves. It is for this reason that the funds are called segregated.
A lesser-known aspect of segregated funds is that they provide creditor protection. This means that should you ever be sued, assets in your segregated funds cannot be attached by creditors. This protection is not available, to your bank RRSP’s, your mutual funds, your business or your house. If you are the owner of a business you should be holding most of your personal assets in segregated funds.