1. RRSP contributions can reduce your marginal tax rate so while you pay less tax you also have a saving that will grow in years to come (tax shelteed).
2. When you withdraw the money you are in a lower income bracket after retirement so you anyway pay less Income tax on it.and RRSP can be converted to Retirement income fund so payment of tax is further stretched out as well as your retiremnt income is supplemented to maintain a decent lifestyle.
In last couple of weeks there have been a few articles in newspapers do try to read up as it discusses the issue you brought up in detail and by different authors ..helps you get point of view from different people.
I am providing you some links here .

http://www.theglobeandmail.com/servlet/story/RTGAM.20070127.wstcest27/BNStory/Business/

http://www.theglobeandmail.com/partners/free/rrsp2007/



On RESP you contribute from your after tax money but the government also adds to it( CESG)and the money grows tax sheltered and on withdrawal it is taxed at the MTR of the child concerened at a time when his income is either zero or very low so less tax to pay......there has been a lot of discussion on this in the past

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Originally posted by sendneeraj

I am plannin to save through RRSP but i have one question that don't you think its good to save some money every month in your bank account instead of putting money in RRSP? Becaues when you save money on RRSP they don't even pay interest and even if they do.......how much ? 1-2% ?

Because when we save something for retirement and get cut on tax but when we withdraw money - (doesn't matter at the age of 69 or before) we have to pay tax on total amount and govt count rest of the money in next yr income and we pay tax again.

Somehow i am not very much impressed with all this RESP and RRSP...can you guide me or correct me if my calculation is wrong somewhere ? I have gone through all posting but still i am not getting ans. that should I save some money every month in my bank account or start putting something in RESP or RRSP...

Anyway your details were really helpful to make decision. thanks in advance.

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BTW Sendneeraj, didn't the bank person show you that it is better to invest in mutual funds or seg funds as even if you put the money in a CD giving you 5% or more, you are taxed 100%.

If you are in the 40% bracket a 5% increase in your money will leave you with 3% which is about the retail annual inflation rate (actually less than the retail inflation rate), so the purchasing power of your money one year later is less than it is now?

That's what my bank person tells me these days, A few years ago the same person told me fixed deposits are the way to go because banks had put out TV ads saying mutual funds are dangerous- I am sure many of you who have been in Canada for more than 3 years, remember those ads.Now he sings a different story. When I told him so- he says he has to say what the bank officials tell him to say.

Talk about flip-flop. I have money in mutual funds since 1982 and for me it has always been the way to go in up or down markets.

India is catching on now. The mutual fund industry there is really smoking.Get on the bandwagon- its always rocking! I guess the buzzword these days is rappin' or hip-hopping!

I am waiting for the day when the buzzword will be Bollywooding!

Imagine "Mutual Funds Bollywood !" instead of "Mutual Funds Rock!"

Bollywood turns from noun to verb!

How is PC financial RRSP saving account. It is giving 4% interest and there is no fees, etc.

I am also looking at TD mutual funds and all of them charge $100 administration fees and also early withdrawl or transfer fees. I believe all these fees are somewhat same with other banks too. Can we buy mutual funds without paying administration fees.

Any suggestions (for medium term investment 3-5 years), where to invest for RRSP and also without RRSP.

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Originally posted by Ash20

How is PC financial RRSP saving account. It is giving 4% interest and there is no fees, etc.

I am also looking at TD mutual funds and all of them charge $100 administration fees and also early withdrawl or transfer fees. I believe all these fees are somewhat same with other banks too. Can we buy mutual funds without paying administration fees.

Any suggestions (for medium term investment 3-5 years), where to invest for RRSP and also without RRSP.

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Thanks investpro for the ING direct link, but it looks from their website that this is not for RRSP. My immediate requirement is for RRSP.

Do you have license to sell mutual funds in BC, as I am in Vancouver.

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If you are looking for a fixed deposit ING is offering good rates see

http://home.ingdirect.com/products/products.asp?s=OrangeCD

If you are looking for mutual funds there is no better person than me

Jokes aside, I have worked in the mutual fund industry for 20 + years now in companies such as Franklin Templeton, Fidelity, Mackenzie, AGF and several other companies. If you need info regarding no load funds with no administration fees please feel free to PM me.

For 3-5 years mutual funds are good investments or there are securities linked fixed deposits or equity linked GICs which guarantee your initial investment plus upside ( growth) potential.

Personally I have a PC savings account where part of my portfolio lies. I find it very good, though if you see the above link ING is better.

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Hi ash 20,
Try royal direct in RBC website you will have access to all investments within RRSP from RBC and also other financial institutions ..it is great if you are rate shopping and even otherwise if you are looking for investments where principal is secure and returns are linked to the S&P/TSX60 you can try candian market linked GIC .
I personally feel that mutual funds are long term investments(5-10 years) even though some of them may be good investments even in 3-5 years .but as these investment tend to be more risky you should sit down with a financial planner and he can guide you what to do and help you select the appropriate mutual funds suiting your goals and your personal situation.