Investments RRSP, GIC, RRIF, Tax Deductible Leverage Loan

INVESTMENTS

"It's not your conditions, but your decisions that shape your financial destiny"
Anthony Robbins

RRSP

Individual RRSP

Spousal RRSP

GIC

RRIF

Annuities

Segregated Funds

Tax Deductible Leverage Loan

REGISTERED RETIREMENT SAVINGS PLAN (RRSP's)

There are two different ways to invest:

The first method is the lump sum purchase method.
The second method is Dollar Cost Averaging.

Dollar Cost Averaging takes the emotion out of your "when to buy" decision. Investment buys more units when the unit value or price is down, and fewer units when the unit value is up. It's very difficult to predict changes in unit value and always buy at the right time, but by purchasing units every month on a regular basis you smooth out the fluctuations.

The following table shows an example of monthly investments of $100. In this example prices fluctuate above and below the initial unit price at the beginning of the period. On average, the unit price evens out to $10 and you would expect to purchase 120 units with the 12 deposits of $100. However, because your $100 deposit purchases fewer units when the price is up - and more units when the price is down - you actually end up with 127 units at the end of the year.

Month	Deposit	Unit Value	# of Units Purchased
January	$100	$10	10.00
February	$100	$9	11.11
March	$100	$12	8.33
April	$100	$14	7.14
May	$100	$11	9.09
June	$100	$13	7.60
July	$100	$7	14.29
August	$100	$9	11.11
September	$100	$6	16.67
October	$100	$8	12.50
November	$100	$11	9.09
December	$100	$10	10.00
		$1,200	127.02
Value of units purchased after one year: $1,270 (128.02 units@$10) Less Investment: $1,200 (12X$100) Gain: =$70

INDIVIDUAL RSP

Will I have enough money to retire? You may receive some help from the government, but will it be enough? We can help you with this question and create the action plan to help you retire the way you want..

Why Contribute to an RRSP?

RRSP's generally provide:

Tax deferred growth
A reduction in income tax payable
The ability to maximize on earned monetary gains by withdrawing in retirement
(presumably in a lower tax bracket)
Options for splitting income - benefits from deductions at a higher earning tax rate
The availability of an interest free loan when purchasing or building a home (Home Buyer's Plan)
The Lifelong Learning Plan, the ability to withdraw funds to finance training or
education for yourself or your spouse (does not apply to locked-in RRSPs)

RRSP Contribution Limits ($)
Year	18% of earned income from the prior year to a maximum of:
2003	14,500
2004	15,500
2005	16,500
2006	18,000
2007	19,000
2008	20,000
2009	21,000
2010	22,000
2011	22,450
2012	Indexed to Average Wage Growth

SPOUSAL RRSP's

Spousal RRSP's are an important tax planning tool. An RRSP is designated as spousal when one spouse contributes to a plan in the other spouse's name. It is possible for an individual plan to become spousal if the spouse later contributes to the plan. A plan can also become spousal if it accepts a transfer from another plan that was spousal.

ENCOURAGE YOUR CHILDREN TO FILE A TAX RETURN

If your children earn even small amounts of income, encourage them to file a tax return. While many low income Canadians don't file tax returns because they earn less than the personal exemptions amount, and therefore won't pay income tax, they could be passing up some advantages.

These include the following:

Accumulation of RRSP Contribution Room
Generally speaking, you may make contributions to an RRSP to the extent of your contribution room you have accumulated. On January 1st of each year, you have new contribution room based on 18 per cent of the previous year's "earned income."
Even if your children aren't ready to make an RRSP contribution, they may carry forward any accumulated RRSP room indefinitely. So, this year's filed tax return could result in benefits down the road when your children are ready to make a contribution. It all begins with filing income tax returns and building that room now.

GIC

Guaranteed Investment Certificates

These are traditional bank GIC's You deposit money and the bank pays you interest at very attractive rates.

There are usually two types of Guaranteed Investment Certificates - 1-10 Year GIC's or Short Term Deposits

Guaranteed Interest Contracts

This type of GIC works in a similar way - you deposit money and the insurance company pays you interest. The difference is that you are investing your money through an insurance company. The difference has it's benefits: you may designate a beneficiary, Probate fees and estate settlement delays may be avoided upon death - You may have creditor protection.

Registered Retirement Income Fund (RRIF's)

The Registered Retirement Income Fund (RRIF) is the best retirement income option for most Canadians since it can be tailored to meet their needs. A RRIF is essentially a mirror of an RRSP. It can hold the same types of investments and provide the same tax-sheltered growth. Similar to an RRSP, you control the investment decisions. However, RRIF’s are designed to distribute assets in the form of retirement income. Contributions to a RRIF are not allowed.

Once you transfer your RRSP to a RRIF, you must withdraw a minimum amount each year, specified by a formula based on your age. Since there is no maximum withdrawal limit, you are free to withdraw any amount you wish. However, you include your RRIF payments as income for tax purposes. While there is no minimum age for starting a RRIF, you can postpone establishing one until you are 71. In the initial year of a RRIF, you are not required to withdraw a payment. You may delay the withdrawal until the following year.

Annuities

An Annuity can provide Peace of Mind for you. An Annuity provides a dependable, guaranteed source of income. You income can last for life or a chosen period of time. Some features of the Annuity are:

Income Protection for your Spouse,
Payment Guarantees,
Tax Advantages,
Simplicity and Peace of Mind.

segregated Funds

Segregated Funds are purchased under an insurance contract, and you therefore enjoy advantages beyond those of a regular investment plan. Consider the certainty that a Death Benefit Guarantee and Maturity Guarantee could bring to your financial plan. Think what Estate Planning and potential Creditor Protection features could do for your family and business.

Subject to	Mutual Funds	Segregated Funds
Probate Fees	Up to 1.4%	Nil
Legal Fees	2 - 4% avg	Nil
Accounting/Trustee Fees	1-3% avg	Nil
Potential Estate Costs	Up to 8.4%	Nil
Privacy	Public Record	Private
Creditor Protection	No	Yes
Death Benefit Guarantees	No	Yes
Maturity Guarantee	No	Yes
Fund Distribution	?	Upon Proof of Death