Tuesday, July 21, 2009
Ok, so pretty much all of you watch TV and you've seen commercials for CIBC or RBC and they throw a whole bunch of crazy abbreviations at you that you've never understood. Today I'm going to take any lack of understanding about these acronyms and blow it out of the water...hopefully anways! :P I'll give you the abbreviation, what it stands for, then what that means to you.
RRSP - Ah yes the Registered Retirement Savings Plan - This is probably the most important one that any of you will come across...unless you're American of course! When you invest your money any income you earn (growth) will be taxed by the government. However, if you invest using an RRSP all of that growth is tax sheltered. This means it grows tax free. If you decided to take the $$$ out before 55 (which I wouldn't suggest anyway) then you would have to claim that as income on your taxes and will have to pay income tax on it.
RRIF - Registered Retirement Income Fund - Once you retire you convert your rrsp into an rrif. This allows you to pay yourself a set income per year in your retirement.
Non-registered - Not an abbreviation but something you should know - Investments where the growth is not sheltered by the government.
TFSA - Tax-Free Savings Account - I'm sure you've seen all the commercials for the TFSA. This is basically a mini-rrsp, there is a $5,000 limit on the amount you can deposit per year, but you can take the money out whenever you like tax-free!
RESP - Registered Education Savings Plan - Allows for tax-free growth on an investment to be used towards a child's education after highschool. The government will grant up to 20% of the first $2,500 invested each year. This means they add up to another $500/year for the investment.
Alright I think this is enough for today! I don't want your brains to explode or anything ;)
These are all ways in which you can invest your money. You can have multiple investments in any of them. From mutual funds, segregated funds, GICs, GIOs, bonds, T-bills etc.
Well I hope this has been informative for all of you. And just so you know, yes, I can help you with any of these. If you're looking to start an RRSP, have wondered about a TFSA, or just strictly want to start saving your hard earned dough give me a call!
Have a great one!
Mike
3 comments:
this all makes a lot of sence. one thing ive never undertstood is:who is Dow Jones? is he americain since most money is weighed in u.s. dollars???
http://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average
It is american. Apparently it's named after the people who created it. Dow and Jones
It's a market index used for comparing investments. We have one here in Canada as well called the TSX. The TSX is a great indicator of how the markets are doing now and it also shows you the general ups and downs of the market's history.
Sorry it's the S&P/TSX that's the index.
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