Comments on: The Case for RRSPs Over Everything Else http://www.investingintelligently.com/2007/02/19/the-case-for-rrsps-over-everything-else/ Not just another (Canadian) financial blog Fri, 05 Dec 2008 10:17:41 +0000 http://wordpress.org/?v=abc By: Dave http://www.investingintelligently.com/2007/02/19/the-case-for-rrsps-over-everything-else/#comment-8140 Dave Sun, 02 Nov 2008 22:34:41 +0000 http://www.investingintelligently.com/2007/02/19/the-case-for-rrsps-over-everything-else/#comment-8140 Mark, thanks for the updated link. I've updated it on my original post. Mark, thanks for the updated link. I’ve updated it on my original post.

]]> By: Mark http://www.investingintelligently.com/2007/02/19/the-case-for-rrsps-over-everything-else/#comment-8135 Mark Sat, 01 Nov 2008 02:07:10 +0000 http://www.investingintelligently.com/2007/02/19/the-case-for-rrsps-over-everything-else/#comment-8135 Hello, You can find the PH&N Report at the following address: https://www.phn.com/Portals/0/PDFs/ArticlesandAdvice/Publications/retirement_savings_debate.pdf It's a good read. Regards Everyone. Hello,

You can find the PH&N Report at the following address:

https://www.phn.com/Portals/0/PDFs/ArticlesandAdvice/Publications/retirement_savings_debate.pdf

It’s a good read.

Regards Everyone.

]]> By: Canadian Capitalist » Smoke and Mirrors Myths, Part 2 http://www.investingintelligently.com/2007/02/19/the-case-for-rrsps-over-everything-else/#comment-6661 Canadian Capitalist » Smoke and Mirrors Myths, Part 2 Mon, 12 Mar 2007 10:50:35 +0000 http://www.investingintelligently.com/2007/02/19/the-case-for-rrsps-over-everything-else/#comment-6661 [...] Related: The Case for RRSPs Over Everything Else [...] [...] Related: The Case for RRSPs Over Everything Else [...]

]]> By: Canadian Capitalist http://www.investingintelligently.com/2007/02/19/the-case-for-rrsps-over-everything-else/#comment-6636 Canadian Capitalist Thu, 08 Mar 2007 21:49:03 +0000 http://www.investingintelligently.com/2007/02/19/the-case-for-rrsps-over-everything-else/#comment-6636 My post will focus on the RRSP versus mortgage debate, so I'll comment on RRSP versus taxable portfolios here. Martin is right about RRSPs being better than taxable portfolios for almost everyone not in the lowest tax bracket. People generally underestimate the corrosive nature of taxes and don't appreciate the importance of RRSPs in deferring taxes on investment gains, dividends and interest. Warren Buffett calls unpaid capital gains as a free loan from the IRS. Imagine what he would say about a vehicle that lets you defer ANY tax, even the initial capital! My post will focus on the RRSP versus mortgage debate, so I’ll comment on RRSP versus taxable portfolios here. Martin is right about RRSPs being better than taxable portfolios for almost everyone not in the lowest tax bracket. People generally underestimate the corrosive nature of taxes and don’t appreciate the importance of RRSPs in deferring taxes on investment gains, dividends and interest. Warren Buffett calls unpaid capital gains as a free loan from the IRS. Imagine what he would say about a vehicle that lets you defer ANY tax, even the initial capital!

]]> By: Canadian Capitalist http://www.investingintelligently.com/2007/02/19/the-case-for-rrsps-over-everything-else/#comment-6634 Canadian Capitalist Thu, 08 Mar 2007 21:34:13 +0000 http://www.investingintelligently.com/2007/02/19/the-case-for-rrsps-over-everything-else/#comment-6634 The PHN report can be found <a href="https://www.phn.com/Portals/0/PDFs/ArticlesandAdvice/Publications/retirement_savings_debate.pdf" rel="nofollow">here</a>. I am continuing this debate in a post in the near future, so I'll put my comments there. The PHN report can be found here.

I am continuing this debate in a post in the near future, so I’ll put my comments there.

]]> By: Dave http://www.investingintelligently.com/2007/02/19/the-case-for-rrsps-over-everything-else/#comment-6328 Dave Thu, 22 Feb 2007 21:32:42 +0000 http://www.investingintelligently.com/2007/02/19/the-case-for-rrsps-over-everything-else/#comment-6328 Kevin, here's what my strategy would be. Start with an RRSP that has no fees then go to a self-directed account once you meet the minimum amount for the fee to be waived. For example: TD has mutual fund RRSP accounts that have no fee. You can buy TD Index eFunds which have very low fees. Once you have $25,000 in an RRSP you can switch to E*Trade as E*Trade waives fees for those with over $25,000 if I remember correctly. Or you can move to TD Waterhouse or any of the other places. Kevin, here’s what my strategy would be. Start with an RRSP that has no fees then go to a self-directed account once you meet the minimum amount for the fee to be waived.

For example:

TD has mutual fund RRSP accounts that have no fee. You can buy TD Index eFunds which have very low fees. Once you have $25,000 in an RRSP you can switch to E*Trade as E*Trade waives fees for those with over $25,000 if I remember correctly. Or you can move to TD Waterhouse or any of the other places.

]]> By: Kevin http://www.investingintelligently.com/2007/02/19/the-case-for-rrsps-over-everything-else/#comment-6327 Kevin Thu, 22 Feb 2007 21:18:51 +0000 http://www.investingintelligently.com/2007/02/19/the-case-for-rrsps-over-everything-else/#comment-6327 What about the effects of annual fees for the RRSP. In the example there was about a three hundred dollar advantage for the RRSP and that could easily get wipe out by the annual admin fees What about the effects of annual fees for the RRSP. In the example there was about a three hundred dollar advantage for the RRSP and that could easily get wipe out by the annual admin fees

]]> By: Mike http://www.investingintelligently.com/2007/02/19/the-case-for-rrsps-over-everything-else/#comment-6292 Mike Wed, 21 Feb 2007 14:19:17 +0000 http://www.investingintelligently.com/2007/02/19/the-case-for-rrsps-over-everything-else/#comment-6292 Ace: a couple of other considerations when evaluating the "Derek Foster" method is that as I recall he never made much income in any particular year when he was working so living a frugal life would probably be a natural extension of that fact. Also - if you don't make much money then you don't pay much tax and the incentive to contribute to an rrsp is much less (possibly zero). I don't think there is anything really wrong with his strategy in his situation but as Dave said, it obviously doesn't apply all that well to the general public. Ace: a couple of other considerations when evaluating the “Derek Foster” method is that as I recall he never made much income in any particular year when he was working so living a frugal life would probably be a natural extension of that fact. Also - if you don’t make much money then you don’t pay much tax and the incentive to contribute to an rrsp is much less (possibly zero). I don’t think there is anything really wrong with his strategy in his situation but as Dave said, it obviously doesn’t apply all that well to the general public.

]]> By: Dave http://www.investingintelligently.com/2007/02/19/the-case-for-rrsps-over-everything-else/#comment-6284 Dave Wed, 21 Feb 2007 08:07:37 +0000 http://www.investingintelligently.com/2007/02/19/the-case-for-rrsps-over-everything-else/#comment-6284 ace: He's basically got taxable dividends from a $100,000 non-registered investments (assume they are invested and compounded) competing with $6000 in an RRSP (compounded) that is taxed on withdrawal. Basically if you do the math, it can work out to be the same or different but it depends a lot on the assumptions you use. I might play with it some more. There is risk involved with buying up $100,000 in blue chips with borrowed money. Who knows maybe I'll try it someday, but for now it's on my list of things not to do. I said it was bunk because it isn't exactly good advice suitable for general audience on whether or not to use RRSPs. ace: He’s basically got taxable dividends from a $100,000 non-registered investments (assume they are invested and compounded) competing with $6000 in an RRSP (compounded) that is taxed on withdrawal. Basically if you do the math, it can work out to be the same or different but it depends a lot on the assumptions you use. I might play with it some more. There is risk involved with buying up $100,000 in blue chips with borrowed money. Who knows maybe I’ll try it someday, but for now it’s on my list of things not to do.

I said it was bunk because it isn’t exactly good advice suitable for general audience on whether or not to use RRSPs.

]]> By: Dave http://www.investingintelligently.com/2007/02/19/the-case-for-rrsps-over-everything-else/#comment-6282 Dave Wed, 21 Feb 2007 07:29:42 +0000 http://www.investingintelligently.com/2007/02/19/the-case-for-rrsps-over-everything-else/#comment-6282 David, thanks for the AIM link. Totally makes sense and thanks for bringing up the fact that the refund must be invested, not squandered. This is implicit in Martin Gale's calculation, as you pointed out "This is what Martin Gale also states — you have to invest the whole $1000 (the $640 you have in hand, plus the refund you get)." David, thanks for the AIM link. Totally makes sense and thanks for bringing up the fact that the refund must be invested, not squandered. This is implicit in Martin Gale’s calculation, as you pointed out “This is what Martin Gale also states — you have to invest the whole $1000 (the $640 you have in hand, plus the refund you get).”

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