Monthly Archives: February 2011

Odette Morin

RRSP Tid bits

It is a busy time of year for us right now with RRSP season in full swing.  I do not have a lot of time to write full blog articles.  So I thought I would collect a few daily thoughts and make a weekly blog of them!

Here are the questions I answer daily:

.should I make an RRSP or not?

.should I make a TFSA contribution instead?

.should I reduce my mortgage instead of making an RRSP this year?

.am I saving enough to retire comfortably at a certain age?

….will I owe taxes?

.how much RRSP should I make to cancel what I owe?

.how much of a refund can I expect if I make x amount of RRSP?

.etc etc etc etc

Don’t be afraid to consult. It may be the best investment you will ever make!


Spousal RRSP contributions are a way to split income at retirement to reduce taxes. With the new pension splitting laws, you can now split RRSP income at retirement but only from age 65+.

Before making your RRSP contribution, look at who made the most income this year and who has the most retirement savings. Try to equalize the pots… of money. If you made the most income, you should make the deduction in a regular RRSP or in a Spousal RRSP. This way you get the deduction and your spouse gets the RRSP investment in his or her name. With RRSPs, tax planning starts now!

The rate of saving is still more important than the rate of return. In a recent Scotia bank survey, reported in the website on Feb 18, 2011, 39% respondents said they would begin investing at a much earlier age. Another 21% would have spent less and invested more, while 41% feel they started saving for retirement much too late. Just save a little consistently.

Investing and Savings is like Exercising,
a little regularly goes a long way. Consistency and regularity makes you fit. A regular monthly RRSP will make you financially fit. Money you don’t have, you won’t spend. It is a lot easier to put away $100 or $500 a month instead of writing a cheque at this time of year for $1200 or $6000. Do a little monthly contribution and top it up every February is the sure way to a fit and comfortable bright retirement!


Tax planning of RRSP withdrawals is crucial to keep tax low and preserve government benefits.

click here for the full story

Did you look at your investment statement lately? The past 12 months returns for a balance portfolio of 20% bonds and 80% equity average 14% to 16%. It is interesting to see that most of our model portfolios also beat the benchmark. Managed money, even with management fees, may indeed do better if well managed.

RRSP loan debate continues. You will quickly see how big of a question borrowing to invest is from this article alone. The bottom line here, is that the interest rate you earn on the investment must be more than the cost of borrowing. If you can pay less tax after retirement it will also work in your favour.

Click here for the full story


Anthony Sabti

RRSP contribution does not equal RRSP deduction.

Remember that if you make a make an RRSP contribution in 2010, you do not have to deduct that contribution on your 2010 tax return.  You can save that contribution and apply in future years, when it may get you a higher tax savings.  Meanwhile, you’re money is still invested and is still benefiting from tax-sheltered growth. 

Here’s an example:

You’re taxable income is $45,000 in 2010, which in BC puts you in a 30% tax bracket.  The 30% tax bracket starts at just under $41,000, and below that mark you’re in a 23% tax bracket or lower.

Now let’s say you make an $8,000 RRSP contribution in 2010.  You could deduct the full $8,000 on your 2010 tax return, and you would get a 30% tax bracket savings on $4,000, and only a 23% tax bracket savings on the other $4,000. 

Or you could deduct $4000 on your 2010 return, and the other $4000 on your 2011 tax return, so that you get the 30% tax bracket savings on the full $8,000 (assuming the same salary in 2011). 

This does mean that you have to wait a little longer for your tax refund, but you’ll get more out of if you do. So pay attention to your tax brackets, and remember that you don’t have to claim all your contributions in the year you make them. 

For you reference, here are the 2010 BC combined federal and provincial marginal tax rates:

0 – $35,859 – 20.06%

$35,859 – $40,970 – 22.70%

$40,970 – $71,719 – 29.70%

$71,719 – $81,941 – 32.50%

$81,941 – $82,342 – 36.50%

$82,342 – $99,987 – 38.29%

$99,987 – $127,021 – 40.70%

$127,021 and up – 43.70%

Odette Morin

What do Fine Wines have to do with Financial Planning?

What do fine wines have to do with financial planning?  Those of you who know me, know well that I love my wine, but not any kind.  I am actually quite picky with my wine selection.  In fact, I’d rather not have any than have a cheap, tannic, heavy and lifeless wine from a high volume winery.  Don’t get me wrong, there is absolutely nothing wrong with a lower priced wine. You can often find deals in wine too and taste is a very personal choice. However I find, more often than not, that I derive more satisfaction from quality. I’d rather wait and get that exquisite & elegant wine and pay the cost.

Financial Planning is the same.  You can get free advice from the business section of the newspaper, your well meaning neighbour, a friendly bank employee who presses on their products or a not so thorough advisor or, you can get top notch, well researched, properly analysed fine advice. The result will be a clear and solid plan to ensure the stress free lifestyle you want for the many years ahead.

In life, you pay for what you get. Cheap or free is not always the best.  With decisions as important as your financial well being for the next 30+ years, fine advice will sure be the way to enjoy that fine life.

Don’t be afraid to pay for advice. It is the best investment you can make.