Since its my ultimate Goal to enrich u with all the knowledge I have so that you can make very wise financial decisions so today I m giving u knowledge of about one of the important topic which effects us on Day to day.

RRSP How it work and how u can fully Utilize it

1. When you do RRSP say 5000. This 5000 is deducted from your income. Say you are making 55000 and since after 42000 you in 31% tax bracket and you do RRSP of 5000. In that case you will only have to pay tax on 50000 of income. On 5000 you will save aroung 5000×31% appx 1550. If you are 40% tax bracket then u save 2000.
2. RRSP is generally not recommended for people who are making less then 36000. Since they are in lower tax bracket what situation may be different sometimes.
3. When u withdraw money from RRSP it is added to your income and according to bracket you pay taxes.
4. Very important if u do RRSP and sometime you need money urgently then do not withdraw the RRSP what get a loan on RRSP. Bank easily give up to 90% as loan against the security of RRSP. And later on you can pay the loan in instalment of pay the interest on that loan. Donot withdraw from RRSP for short term need of funds.
5. Few other unanswered questions regarding RRSP
6. It’s a myth that you can only withdraw form RRSP at retirement.You can withdraw rrsp anytime when u need it. But withdraw only in that year when u donot have income so if you withdraw up to 12000 (24000 for husband and wife) you donot pay any taxes.
7. You  can take rather loan on RRSP security then u pay 0 taxes. You can go to bank each bank gives u loan up to 90% on the security of RRSP so you donot need to withdraw it
8. RRSP is big tool for stablising your income stream. In retirement you hardly pay any taxes on RRSP. After 65 You pay donot pay taxes up to 18000 individual and 36000 family. RRSP if you transfer it to RRIF then another 2000(4000 husband and wife) is not taxable.
9. If You RRSP sometime I decide how much I should claim it in your taxes rest we can carry forward to Next Year.
10. RRSP helps you to increase your child tax benefit, GST  since child tax benefit is related to income

TFSA how it works

1. TFSA is only for those people who have already maximized on their RRSP. In TFSA only advantage is whatever income you earn on TFSA amount is not taxable.
2. Sometime bank people misguide you to put money in TFSA instead of RRSP although you are in 31% tax bracket or more. That’s a very bad tax planning and you loose big time by doing it.
3. TFSA comes in to picture much for people who have lot of money and particularily seniors since lot of benefits in that age are tied to income and you have lot of money at that age also. So TFSA works best for seniors
4. Some young people say to me I want to invest in TFSA over RRSP since I donot know in future when I will need money. So my answer to them invest in RRSP what when u need money in future take a loan on RRSP Security
5. TFSA you can not regularily withdraw and deposit in the same year. Each time you deposit you have to be still in the limit of TFSA. Amount withdrawn in that paritcular year is not counted.

To conclude please read the above and make sure u take wise financial decisions.

If you want to make 5% or more on your investment then contact me but there is a consultation fee for that and it’s a detailed discussion.