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Originally posted by jake3d

What I consider now as a major mistake when I started having a decent income is NOT opening an RRSP account. Ofcourse, now I have all thar unclaimed amounts that I can use for Tax deductions, but my portfolio would have been much bigger if I started earlier. Especially since my company would match my contributions by half. I wasted 4 years. If you can afford to do so, it is a great way to pay oneself and save on Taxes.

Its not only what you make but also what you keep that counts.

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Originally posted by investpro
Don't forget the meltdown or drawdown later on i.e changing from RRSP to non-registered so you save on paying taxes when you retire/don't retire and withdraw.

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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."

-- Rhett Butler in "Gone with the Wind"

Always Remember:

IF IT'S TOO GOOD TO BE TRUE, IT USUALLY IS

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Originally posted by lana2005

Hello everybody,

I am trying to compile a list of mistakes made by us when we were ignorant about Canada (read it as when we were new immigrants). The intention of this list is to make other new and old desis aware of the scams or small prints so that they donot get cheated.

All contributions are appreciated. But, please no Canda or India bashing, please keep it to the actual experience.

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Can someone explain to me what does not investing into RRSP or RESP got to do with mistakes made in Canada? I think not providing for future needs is a mistake anywhere in the world.

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Chandresh

Advice is free – lessons I charge for!!

Hi Pratikm

A meltdown or drawdown is a technique by which in your later years , when you have accummulated enough RRSPs, you do a switcheroo on these investments to a non-registered a/c.

Let us assume that you have been contributing to your RRSPs for say 20 years and you are now say 50 years and have $250,000 in your RRSP a/c. Using a financial technique you can change this to a non-registered a/c and thus pay only 50% tax on your capital gains upon withdrawal at retirement instead of the 100%.
I am sure you know that when you withdraw from RRSPs at retirement you have to pay 100% tax. Using this technique you pay only 50% on capital gains when the registered money switches to non-registered.

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Originally posted by investpro
Let us assume that you have been contributing to your RRSPs for say 20 years and you are now say 50 years and have $250,000 in your RRSP a/c. Using a financial technique you can change this to a non-registered a/c and thus pay only 50% tax on your capital gains upon withdrawal at retirement instead of the 100%.
I am sure you know that when you withdraw from RRSPs at retirement you have to pay 100% tax. Using this technique you pay only 50% on capital gains when the registered money switches to non-registered.

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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."

-- Rhett Butler in "Gone with the Wind"

RRSPs do not have cap gains taxes. Any withdrawal you make from your RRSP account it taxed like income. When you put the money in - it is actually pre-tax money (post-tax but you get the tax back). The growth in the RRSp is tax free regardless of type of return (dividends, interest, gains). When you withdraw, the money is taxed like income. If you do it at a time when you have other incomes, it is simply added on. Advantage of RRSPs is when you draw the money over a long period of time when there is no other income. You either don't pay ANY taxes or you are in the lowest tax bracket.

There is nothing like 100% tax. 100% tax implies all of the money is taken by the govt. The problem with the scenario by investpro is that you pay taxes to get the funds out of RRSPs and then pay taxes when the investment grows outside the RRSP.

BV