By the time you read this, the 2011 RRSP deadline will have passed. So why would you want to read another article on RRSP's and their merits? Now is the perfect time to start planning for 2012 contributions. Many people seem to think that you can only contribute to your RRSP plan from January 1st to March 1st. In fact, you can do so throughout the year.
While financial planners might argue that you would make more money investing outside of your RRSP, most of us lack the research time and knowledge to invest wisely. As a result, RRSP's are better than not saving for your retirement.
Another way to save is by opening a TFSA, a tax free savings account. This works like a reverse RRSP. It allows you to save tax free and withdraw your invested funds tax free but there is no tax deferment offered when you open the account and deposit funds.
There are different viewpoints on whether you should pay down your mortgage or contribute to your RRSP first. Which gives you the best monetary advantage? Should you consider taking out some equity you've gained in your home and purchase RRSP's and other investments? One strategy is Fraser Smith's "Smith Manoeuvre" which takes money from your house to invest and makes your mortgage tax deductible. Recently, Craig Alexander, Vice President and Deputy Chief Economist for TD Bank Financial Group visited Calgary. When asked these questions, Alexander's standard bank answer was, "For several years now, banks have pushed the idea that you should contribute to your RRSP and then use the refund cheque to pay down. This way you pay down both."
While this statement rings true, do you get more bang for your buck that way? Think about it. Banks want you to invest in their RRSP's and to take your time paying down your mortgage. They make significant income from the interest you pay them every month. Should you be asking your bank for financial advice? Remember that the person behind the desk gets paid by the bank, therefore, they tend to put the bank's interests first. Look to a trusted, independent financial planner to give you a more unbiased point of view.
Is Calgary's Housing Bubble Going to Burst?
Is it safe to take equity out of your house for investment purposes? What if the Calgary housing bubble bursts and property values drop? There is a certain amount of risk in this as real estate prices can fall. In the past year, this has happened in California and several other American states.
Craig Alexander from TD Bank Financial Group addressed this question and believes the Calgary housing market will not burst and will experience a soft landing. The reasons he stated for his opinion were clear. In California, the housing market was heavily influenced by speculators: people buying homes for investment purposes. "When economic conditions are booming, it can also create the perfect breeding ground for speculative price bubbles to form. That's because in such an environment, housing market participants are at greater risk of developing a case of irrational exuberance, especially if they expect that such exorbitant price gains will continue indefinitely."
In California, 43% of home buyers were speculators while here in Calgary, only 10% are.. In addition, Alexander stated that the massive influx of people moving to Calgary and all of Alberta from other provinces stimulated a genuine tight housing market and drove prices up last year. As a result, housing prices won't drop drastically as there is huge demand for homes. Recently the Calgary Real Estate Board predicted that single family homes would increase in value by 7% and condos by 9% in 2007. Real estate continues to be a good investment in the Calgary market. You certainly won't get that kind of return on your investment from your bank account.
No matter what your viewpoint is on these issues, an undeniable truth is that you need to save for your retirement. How you do this is a matter of choice. Consult an independent financial planner you trust. Lines of credit, second mortgages or switching your first mortgage are strategies for doing equity take-outs.. If you choose to do an this, call your favourite independent mortgage consultant to find out the best way to do this.
Finally, on March 18, 2011, new mortgage rules will come into effect. Check out my blog at http://bit.ly/efgVTn to find out more.
While financial planners might argue that you would make more money investing outside of your RRSP, most of us lack the research time and knowledge to invest wisely. As a result, RRSP's are better than not saving for your retirement.
Another way to save is by opening a TFSA, a tax free savings account. This works like a reverse RRSP. It allows you to save tax free and withdraw your invested funds tax free but there is no tax deferment offered when you open the account and deposit funds.
There are different viewpoints on whether you should pay down your mortgage or contribute to your RRSP first. Which gives you the best monetary advantage? Should you consider taking out some equity you've gained in your home and purchase RRSP's and other investments? One strategy is Fraser Smith's "Smith Manoeuvre" which takes money from your house to invest and makes your mortgage tax deductible. Recently, Craig Alexander, Vice President and Deputy Chief Economist for TD Bank Financial Group visited Calgary. When asked these questions, Alexander's standard bank answer was, "For several years now, banks have pushed the idea that you should contribute to your RRSP and then use the refund cheque to pay down. This way you pay down both."
While this statement rings true, do you get more bang for your buck that way? Think about it. Banks want you to invest in their RRSP's and to take your time paying down your mortgage. They make significant income from the interest you pay them every month. Should you be asking your bank for financial advice? Remember that the person behind the desk gets paid by the bank, therefore, they tend to put the bank's interests first. Look to a trusted, independent financial planner to give you a more unbiased point of view.
Is Calgary's Housing Bubble Going to Burst?
Is it safe to take equity out of your house for investment purposes? What if the Calgary housing bubble bursts and property values drop? There is a certain amount of risk in this as real estate prices can fall. In the past year, this has happened in California and several other American states.
Craig Alexander from TD Bank Financial Group addressed this question and believes the Calgary housing market will not burst and will experience a soft landing. The reasons he stated for his opinion were clear. In California, the housing market was heavily influenced by speculators: people buying homes for investment purposes. "When economic conditions are booming, it can also create the perfect breeding ground for speculative price bubbles to form. That's because in such an environment, housing market participants are at greater risk of developing a case of irrational exuberance, especially if they expect that such exorbitant price gains will continue indefinitely."
In California, 43% of home buyers were speculators while here in Calgary, only 10% are.. In addition, Alexander stated that the massive influx of people moving to Calgary and all of Alberta from other provinces stimulated a genuine tight housing market and drove prices up last year. As a result, housing prices won't drop drastically as there is huge demand for homes. Recently the Calgary Real Estate Board predicted that single family homes would increase in value by 7% and condos by 9% in 2007. Real estate continues to be a good investment in the Calgary market. You certainly won't get that kind of return on your investment from your bank account.
No matter what your viewpoint is on these issues, an undeniable truth is that you need to save for your retirement. How you do this is a matter of choice. Consult an independent financial planner you trust. Lines of credit, second mortgages or switching your first mortgage are strategies for doing equity take-outs.. If you choose to do an this, call your favourite independent mortgage consultant to find out the best way to do this.
Finally, on March 18, 2011, new mortgage rules will come into effect. Check out my blog at http://bit.ly/efgVTn to find out more.