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7 Things You Must Know About A RRSP

7 Things You Must Know About A RRSP

 

RRSP season is upon us and we want you to educate yourself about how contributing into your RRSP investment account may not be the best place to be putting your money.  Take a look at these 7 points below and see the downsides of opening and contributing into an RRSP:

  1. When you open and contribute into an RRSP, you are entering into a game where the opposing player is the CRA and they have the power to change the rules at any time.

  2. You do not get a tax deduction when contributions are made, you receive an income reduction which minimizes the taxes you pay in the years the contributions are made.

  3. If when you pass away and your spouse is deceased, your total RRSP account will be added to your estate’s income increasing the tax rate to your beneficiaries.

  4. The tax obligation increases as your account grows.

  5. You could pay more taxes than anticipated if your future tax bracket is higher when you withdraw than when you postponed the tax.

  6. Your money is not easily accessible or available as collateral.

  7. Even with an average return of 8% after taking into account: market volatility, taxes, management fees, and inflation; your net gain could be zero.

Using an RRSP as a retirement vehicle may not be in your best interest.  Click here to see a comparison of Traditional Financial Planning against Prosperity Economics.

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Rich Gane
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May 17, 2017
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