INVESTMENT PLANNING
How to get the most from your savings
Saving for the future is the cornerstone of financial planning, but it can be trickier to get to grips with than it seems. There is a wealth of different types of products on the market, but the first step starts with identifying your reasons for saving. We all have different purposes, be it saving for a house, your child’s future education or even for your retirement. We can support you in choosing the most appropriate savings option for your situation.
With this in mind, let’s take a look at some of the more common products available:
Products with guaranteed interest
This option is best suited to those who prefer a lower level of risk, as it protects your original investment with the opportunity to earn interest at a predetermined, albeit probably lower, rate. In addition, these products offer you peace of mind and security from market fluctuations that may diminish the amount of your original investment.
Many factors will influence your return, including the interest rate, the amount of your investment, and the term’s length.
Take your time to research the funds available for your investment strategy.
Segregated funds
Similarly to mutual funds, segregated funds are market-based but offer additional benefits since they are insurance contracts.
A big plus of this time of investment is that your savings will be protected, and you will be guaranteed to receive between 75% and 100% of your initial investment, less withdrawals, back upon the maturation of your contract or in the event of your death. In addition, some segregated funds also offer an income which is guaranteed for life.
Tax-advantaged savings plans
There are several tax-advantaged saving vehicles available for Canadians.
Tax-Free Savings Account (TFSA)
Tax-Free Savings Account (TFSA) provides the opportunity to save for the future without paying taxes on growth. The TFSA can be used to save for a vacation, a down payment for a home or even retirement. The advantage of the TFSA is that it’s flexible for short, medium and long-term savings.
Registered Retirement Savings Plan (RRSP)
A Registered Retirement Savings Plan (RRSP) is an account that benefits from tax-deferred growth, meaning any money you contribute will be exempt from tax the year you deposit. In addition, the contributions to your RRSP are tax-deductible, which means you pay less income taxes when you contribute to your RRSP. Later, when you withdraw from your RRSP, you are taxed on it.
Registered Retirement Income Fund (RRIF)
Registered Retirement Income Fund (RRIF) allows you to continue the investments in your RRSP on a tax-sheltered basis while you withdraw an income from it. The income withdrawn is taxable. However, you can set up payments and frequency to suit your needs.
Registered Education Savings Plan (RESP)
A Registered Education Savings Plan (RESP) is an investment account geared toward saving for a child’s education. The investments inside the account can grow tax-free, and the significant benefit is that the government will pay a grant into the RESP.
Registered Disability Savings Plan (RDSP)
A Registered Disability Savings Plan (RDSP) is a savings plan intended to help parents and others save for the financial security of a person eligible for the disability tax credit. The government will also pay a grant to the RDSP.
Talk to us; we can help you with what makes the most financial sense for your situation.