Get50 percentonrrs ps

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How To Get A 50 Percent Return On Your RRSPs

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Get50 percentonrrs ps

  1. 1. The Shocking Truths About RRSPsI have reprinted the following news article that appeared in TheProvince newspaper on Tuesday, January 9, 2007.The statistics and rationale are revealing as well as shocking.Are you one of them?RRSP Withdrawals common – study findsToronto - CanWest News Service– More that a third of Canadians havewithdrawn funds from their retirement savings plans, which couldhave a significant impact on their retirement, according to a new studyby the Bank of Nova Scotia.“There may be a strong reasons to make an RRSP withdrawal, such asbuying a home, but we remind Canadians that it is important to makeregular RRSP contributions,” said Ian Filderman, director of mutualfunds at Scotiabank.More than 1,000 investors over 18 participated in the on-line survey inOctober.According to the report, withdrawals from RRSPs have on averagebeen $18,000. Of the people surveyed, 37 per cent listed top reasonsas to buy, build or get a mortgage for a new home.Paying down debt was listed as the top choice for 24 per cent andcovering day – to – day expenses was listed at 20 per cent.Canadians are expecting to live longer than ever and their RRSPsavings should reflect that, Filderman said.A Scotiabank survey in 2006 found Canadians expect to live to about85.Of those people surveyed, 17 per cent said they will need about$100,000 for their retirement. - Article End - SetForLife Financial Services http://HowToBeSetForLife.com Copyright 2006. Mark Huber, CFP All Rights Reserved. -1-
  2. 2. Now lets analyze this for a moment...Why are one third of Canadians (this suggests 8 million of us)taking out money from their RRSPs?Well, because that is all the money they have saved and invested.And why? Because they are contributing just for the tax relief.Then when they need cash for opportunities (buying a home) oremergencies (paying off credit cards and covering forday – to – day expenses) - they tap their RRSPs.This is not a good strategy!Its important too understand why this happens.As many of you know I believe that Canadians are so focusedwith paying off their mortgages that they have little moneyleft over for things like tax relief (contributing to RRSPs)or building up non RRSP investments and savings foremergencies or oportunities.This is why so many are tapping their RRSPs - to get out ofdebt and to cover living expenses when they find that theirpaychecks do not cover the lifestyle that they have.I see this all the time - and its getting worse!The answer - dont get into the vicious cycle to begin with! How To Get A 50% Return On Your RRSPs – Guaranteed!This is available to: 1. Canadians who are concerned with the amount of taxation of their RRSPs SetForLife Financial Services http://HowToBeSetForLife.com Copyright 2006. Mark Huber, CFP All Rights Reserved. -2-
  3. 3. 2. Canadians who want control of their investment assets without “interference” from the “tax man” 3. Canadians who wish larger tax deductions than is currently allowed with RRSPs 4. Canadians who want a retirement lifestyle without “claw backs” 5. Canadians who are concerned about leaving their estate with a significant tax liability on death due to their registered investments. 6. Canadians who want to use a borrowing strategy where THEY are the bank.The main purpose of this program is to get money OUT of an RRSPwithout being drowned in tax.This strategy is now even more desirable with recent tax changeswhere now only 50 per cent of investment capital gains must beincluded in your income for tax purposes.But be aware that meltdown involves using borrowed money—and assuch, may not be suitable for everyone. Leveraging can amplify gainsand losses and you have got to be comfortable with that.The strategy in detailUnder the meltdown strategy, you withdraw money from your tax-deferred RRSP plan to service a “borrow for investment” loan.The following, illustrates an annual RRSP withdrawal $7,500 whichcovers the $7,500 carrying charge associated with a $100,000 loan ata 7.5% interest rate.Now, at tax time you will add $7,500 into your income, BUT that$7,500 is offset by the $7,500 deduction you can take on theinvestment loan interest. SetForLife Financial Services http://HowToBeSetForLife.com Copyright 2006. Mark Huber, CFP All Rights Reserved. -3-
  4. 4. So, just by changing the location of your invested capital you aretransferring the embedded tax from a place where it’s fully taxed to aplace where it’s half-taxed!Or put another way – converting your 100% taxable dollars to50% taxable dollars.Now which scenario appeals to you?As we all know your registered investments such as RRSPs and RRIFsare going to be taxed someday—it’s just a matter of when and byhow much.Now, investors should break the strategy into its two components andlook carefully at each. First, assess your suitability for leveraging. Thereal crux in successful leveraged investing is making sure the moneyis invested prudently.Then look at the wisdom of pulling money out of your RRSP early. Itcould make sense, especially if you are in a lower tax bracket now andanticipate that in retirement—perhaps with a company pension beingpaid—you will be in a higher one.Another scenario is that you just want too use your RRSP as the“bank” and use the “meltdown” mechanism to grow more assetswithout the severe tax implications inherent with RRSPs.Unlike RRSPs, the non registered portfolio will always be available tofund the things in life that come along, like: a new roof the house,braces for “little Johnny”, a college education for the kids, a new car,exotic trips, OR a larger lifestyle in retirement! SetForLife Financial Services http://HowToBeSetForLife.com Copyright 2006. Mark Huber, CFP All Rights Reserved. -4-
  5. 5. How To Get More In Retirement – Guaranteed! RRSP Canadian Canadian Value Canadian Balanced Balanced Annual After Balanced DeductibleClient Annual Fund Annual Fund Withdrawal Withdrawal Annual Fund Interest CostAge(s) Year Returns RRSP-1 Returns RRSP from RRSP RRSP-2 Returns Open 7.50% ("Host (left alone) Accnt") (recipient) (loan owing) $50,000.00 $50,000.00 $100,000.00 42 2006 -7.4 $46,300.00 -7.4 $46,300.00 ($7,500.00) $38,800.00 -7.4 $92,600.00 $7,500.00 43 2007 18.9 $55,050.70 18.9 $46,133.20 ($7,500.00) $38,633.20 18.9 $110,101.40 $7,500.00 44 2008 28.3 $70,630.05 28.3 $49,566.40 ($7,500.00) $42,066.40 28.3 $141,260.10 $7,500.00 45 2009 6.2 $75,009.11 6.2 $44,674.51 ($7,500.00) $37,174.51 6.2 $150,018.22 $7,500.00 46 2010 19.7 $89,785.91 19.7 $44,497.89 ($7,500.00) $36,997.89 19.7 $179,571.81 $7,500.00 47 2011 4.5 $93,826.27 4.5 $38,662.80 ($7,500.00) $31,162.80 4.5 $187,652.54 $7,500.00 48 2012 1.2 $94,952.19 1.2 $31,536.75 ($7,500.00) $24,036.75 1.2 $189,904.37 $7,500.00 49 2013 12.3 $106,631.31 12.3 $26,993.27 ($7,500.00) $19,493.27 12.3 $213,262.61 $7,500.00 50 2014 17.7 $125,505.05 17.7 $22,943.58 ($7,500.00) $15,443.58 17.7 $251,010.09 $7,500.00 51 2015 -12.4 $109,942.42 -12.4 $13,528.57 ($7,500.00) $6,028.57 -12.4 $219,884.84 $7,500.00 52 2016 17.8 $129,512.17 17.8 $7,101.66 $7,101.66 17.8 $159,024.34 $100,000.00 53 2017 1.8 $131,843.39 1.8 $7,229.49 $7,229.49 1.8 $161,886.78 (Loan Paid) 54 2018 27.2 $167,704.79 27.2 $9,195.91 $9,195.91 27.2 $205,919.99 55 2019 -2.2 $164,015.29 -2.2 $8,993.60 $8,993.60 -2.2 $201,389.75 56 2020 13.8 $186,649.40 13.8 $10,234.72 $10,234.72 13.8 $229,181.53 57 2021 27.6 $238,164.63 27.6 $13,059.50 $13,059.50 27.6 $292,435.64 58 2022 7.7 $256,503.31 7.7 $14,065.08 $14,065.08 7.7 $314,953.18 59 2023 -5.4 $242,652.13 -5.4 $13,305.57 $13,305.57 -5.4 $297,945.71 60 2024 15.2 $279,535.25 15.2 $15,328.02 $15,328.02 15.2 $343,233.46 61 2025 11.3 $311,122.74 11.3 $17,060.08 $17,060.08 11.3 $382,018.84 62 2026 -2.3 $303,966.91 -2.3 $16,667.70 $16,667.70 -2.3 $373,232.40 63 2027 -6 $285,728.90 -6 $15,667.64 $15,667.64 -6 $350,838.46 64 2028 12.9 $322,587.93 12.9 $17,688.76 $17,688.76 12.9 $396,096.62 65 2029 8.3 $349,362.73 8.3 $19,156.93 $19,156.93 8.3 $428,972.64 66 2030 12.6 $393,382.43 12.6 $21,570.70 $21,570.70 12.6 $483,023.19 ($75,000.00) $75,000.00 Ttl. 9.20% RRSP 9.20% Withdrawal RRSP 9.20% Non-RRSP Ttl. DeductibleBefore Before Tax $393,382.43 $21,570.70 Tax $ 483,023.19 Interest Cost After $ After Tax $236,029.00 12,942.00 Tax $ 386,418.00 * Disclaimer: The rate of return or mathematical table shown is used only to illustrate the effects of the compound growth rate and is not intended to reflect future values of the mutual fund or asset allocation service or returns on investment in the mutual fund or from the use of the asset allocation service. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. SetForLife Financial Services http://HowToBeSetForLife.com Copyright 2006. Mark Huber, CFP All Rights Reserved. -5-
  6. 6. Rationale: To utilize a disciplined methodology to transfer 100%taxable dollars from RRSPs to 50% taxable dollars in non registered(open) accounts.What the numbers mean:RRSP - 1: Net after tax value = $236,029RRSP - 2: Net after tax value = $12,942Open: After $100K loan repaid in 11th yr. AND net after tax value =$386,418Summary: RRSP-2 and Open = $399,360 OR $163,331 MORE OR69% BETTER than RRSP-1 Strategy ONLYCanadians age 69 MUST convert Registered investments into income -NOT SO with "open" non investments!Illustrating both RRSP and non registered investments cashed out atage 66 for fair after tax comparison.Note : 40% Marginal Tax Bracket Assumed.Also, “open” non registered account assumed to be 100% capital gainseligible for the 50% inclusion rate for tax calculations. In reality, thiswould be a mix of capital gains, dividends and interest – depending onthe asset mix to reflect investor “risk tolerance”.Closing Comments:The illustrated strategy is just that – an illustration of one set ofnumbers.Please note that this strategy works for any numbers – both large andsmall RRSPs and large and small amounts to be borrowed forinvestment purposes. SetForLife Financial Services http://HowToBeSetForLife.com Copyright 2006. Mark Huber, CFP All Rights Reserved. -6-
  7. 7. Additionally, there are many “variations on this theme” that can beemployed.For example, one can continue making RRSP contributions and stillimplement a “borrow to invest” strategy. Or one can make reducedRRSP contributions and still employ this strategy.For those that have not made RRSP contributions for some time andhave a small amount of RRSPs just sitting – this strategy makesperfect sense to consider when you review the illustration again!For those that are currently retired and are forced to be acceptingincome streams from their RRIFs this concept would give much neededtax relief.So as you can see, there are many ideas and variations that spring tomind and can be implemented.Mark Huber, CFP“Live out of your imagination, not your history.”"Tell me what success is to you and Ill draw the plans to build the life ofyour dreams". SetForLife Financial Services http://HowToBeSetForLife.com Copyright 2006. Mark Huber, CFP All Rights Reserved. -7-
  8. 8. PS: If youd like to explore these and other ways to increase thelikelihood of your financial success, contact me directly at(604) 207-9970 or click below:mailto:mhuber@HowToBeSetForLife.com?subject=QuestionFromRRSPReportPPS: While I am thinking about it...I have included the testimonial linkbelow for you to see what others have said about me.I would really enjoy posting your thoughts and comments if you feelthat I have brought value to you with the information you have justread.You can see what others have said here:http://www.howtobesetforlife.com/Testimonials.html(All posted testimonials are done with your approval and we will useinitials only as "real people" identification).This kind of thing really helps with the credibility factor and continuesto underscore in the minds of Canadians what it is that we are doingas we collaborate and partner together - working for YOUR success!It doesnt have to be fancy - just something from the heart.Thanks for considering this for me.You can click here and type in what you wish to say...mailto:mhuber@HowToBeSetForLife.com?subject=MyTestimonial20CommonReportPPPS: We have just made it easier for you to get the word out aboutus! Check this out!http://howtobesetforlife.com/TellAFriend-SetForLife.htmlYou will be inviting them to come and see us here athttp://www.howtobesetforlife.com SetForLife Financial Services http://HowToBeSetForLife.com Copyright 2006. Mark Huber, CFP All Rights Reserved. -8-
  9. 9. Feel free to forward this email to your friends, family and colleagues.After all - you want them to succeed as well - right?Click Here Now...http://howtobesetforlife.com/TellAFriend-SetForLife.html Mark Huber, CFP is also author of - "The UnCanadian Way To Get Rid Of Your Mortgage” http://HowToGetRidOfYourMortgage.com/TheUnCanadianWay.html "The UnCanadian Way To Be House Rich AND Cash Rich" http://HowToBeSetForLife.com/HouseAndCashRich.html "The UnCanadian Way To Create Wealth” http://HowToBeSetForLife.com/TheUnCanadianWay.html "The UnCanadian Way To Get Peace Of Mind And Mortgage Insurance" http://HowToBeSetForLife.com/PeaceOfMindAndInsurance.html "The UnCanadian Way To Tell Your Money Where To Go” http://HowToBeSetForLife.com/TellYourMoney.html "The UnCanadian Way To Get Out Of Debt Fast” http://HowToBeSetForLife.com/BeDebtFreeFast.html "The UnCanadian Way To Deal With Your RRSPs” http://HowToBeSetForLife.com/RRSPsTheUnCanadianWay.html "The UnCanadian Way To Finance Your Kid’s Education” http://HowToBeSetForLife.com/RESPsTheUnCanadianWay.html "The Top 20 Financial Planning Questions I Am Asked & My Answers - The UnCanadian Way" http://www.howtobesetforlife.com/with/20FPQuestions.html SetForLife Financial Services http://HowToBeSetForLife.com Copyright 2006. Mark Huber, CFP All Rights Reserved. -9-
  10. 10. About the AuthorMark Huber is a proud Canadian living with his wife in scenic Richmond, BritishColumbia, Canada.For over 21 years, Mark has worked in the financial services industry. The focus ofMark’s financial planning advisory practice is focused exclusively to British Columbian(BC) Canada residents.Mark’s boutique planning practice works with a select group of clients who are allshare a passionate vision for creating true wealth and living their dream lives.Mark is author of “The UnCanadian Way” series of eBooks and audios. Thesepowerful resources share innovative ideas and wealth building strategies toCanadians so that they will never again view their home, their mortgage, their debts,or their assets in the same way again.Visit: http://HowToGetRidOfYourMortgage.comMark also maintains a premier financial planning site at:http://HowToBeSetForLife.com_______________________________________________________________________Mark Huber, CFPSetForLife Financial ServicesRichmond, British Columbia, CanadaOffice Phone: Richmond (604) 207-9970Office Fax: Richmond (604) 207-9971Office Phone: Burnaby (604) 439-3341Office Fax: Burnaby (604) 439-1900E-Mail: mhuber@HowToBeSetForLife.comWeb Site: http://HowToBeSetForLife.comBlog: http://HowToBeSetForLife.com/TheUnCanadianWay/ SetForLife Financial Services http://HowToBeSetForLife.com Copyright 2006. Mark Huber, CFP All Rights Reserved. -10-
  11. 11. Additional FREE ResourcesContact Us for Your No-Obligation ConsultationTo Begin! Download your "SetForLifeStarterKit" Here!http://howtobesetforlife.com/downloads/SetForLifeStarterKit.pdf"Right click" here & "save as" to your "Desk top"You can contact me directly at:Tel: (604) 207-9970 or click here:mailto:mhuber@HowToBeSetForLife.com?subject=LetsGetTogether"I lead a comprehensive wealth management team thatspecializes in providing customized, innovative and relevantsolutions to business owners, key executives and theirfamilies." Mark Huber, CFP Warning: Opportunity never knocks... So while youre sitting and waiting for the knock to come, opportunity dances away with someone else! SetForLife Financial Services http://HowToBeSetForLife.com Copyright 2006. Mark Huber, CFP All Rights Reserved. -11-
  12. 12. "Outrageous Fortune" "How To Master The "Luck" of Success" http://HowToBeSetForLife.com/OutrageousFortune.pdf "Right click" and "save as" to your "desktop" Enjoy the Read!"Change your mind ... and EVERYTHING changes!"Audio Interview with Dr. Robert Anthonyhttp://howtobesetforlife.com/downloads/DrRobertAnthony.zip ("Right click" and "save" to your "desktop") SetForLife Financial Services http://HowToBeSetForLife.com Copyright 2006. Mark Huber, CFP All Rights Reserved. -12-
  13. 13. Did You Like This Report?We would enjoy hearing your comments.If you would like further information on this or anything else you cancontact us directly at (604-207-9970 or click heremailto:mhuber@HowToBeSetForLife.com?subject=CommentsFromRRSPReportShare This With A Friend!Do you think your friends, family or co workers may find this reporthelpful to them as well?You have my permission to pass it along without making any changesor modifications to the report itself.In fact, we have just made it easier for you to get the word out aboutus!Check this out!http://howtobesetforlife.com/TellAFriend-SetForLife.htmlYou will be inviting them to come and see us here athttp://www.howtobesetforlife.comAfter all - you want them to succeed as well - right?Click Here Now...http://howtobesetforlife.com/TellAFriend-SetForLife.html SetForLife Financial Services http://HowToBeSetForLife.com Copyright 2006. Mark Huber, CFP All Rights Reserved. -13-
  14. 14. Copyright 2007 SetForLife Financial Services. All rightsreserved world wide.Neither Mark Huber, SetForLife Financial Services assume any liabilitywhatsoever for the use of or inability to use any or all of theinformation contained in Marks Web Sites, Blogs, emails, ebooks,Podcasts, audios, teleconference calls, reports, broadcasts andnewsletters.The information expressed and contained in Mark Huber’s Web Sites,Blogs, emails, ebooks, Podcasts, audios, teleconference calls, reports,broadcasts and newsletters are solely the opinion of the author basedon his personal observations and 21 years of experience in thefinancial services industry.Use this information at your own risk. Be responsible! Alwaysdo your own due diligence. -The End- SetForLife Financial Services http://HowToBeSetForLife.com Copyright 2006. Mark Huber, CFP All Rights Reserved. -14-

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