| |
| |
|
Investing Information |
|
|
|
POOF goes your RRIF !
Some time ago I attended a seminar where participants were told to burn some money; a reasonably-sized amount of money. You should have heard the gnawing and gnashing of teeth in that room! Step right up, folks, and light it on fire. Come on now. It's only money. Some people, likely less adept at saving than others, actually rushed forward in an attempt to show how money had no hold over them. There was a principle in there somewhere. Not sure what it was. Others cowered into the corner, refused to take out their wallets, looking for the exits. It does seem reasonable to me to avoid torching cash. After all, you've worked hard for it. Put in years worth of work and put off many luxuries to accumulate what nest egg you have. Burning it would somehow seem to indicate a crack in the psyche. But what if I told you that many people are geared right up to burn tens of thousands of dollars? Oh, they're not going to march forward to the front of some hotel ballroom and pull out stacks of cash from a briefcase and toss them all onto a controlled, indoor bonfire. Nope. That's dramatic. Their method is much harder to picture, but let's try and create a vivid picture nonetheless. Imagine a retired widow or widower. Or, perhaps, a senior single person. A person who is finished working, and has been enjoying the fruits of their savings. They have accumulated several hundred thousand dollars in their RRSP, which has since been transferred to a RRIF. They receive income from this RRIF. Let's say it has $400,000 in it. Like most of us, this person does not want to think about their own demise. Their focus is on their grandchildren, perhaps. Hobbies. The garden. Other things. They are, of course, surprised when they die, and even more surprised when they get a box of popcorn and a front row seat for the posthumous show called 'distribution of your assets'. Let's go straight to the grand finale, shall we? In this last part of the show, the contents of the person's RRIF are put in an over-sized briefcase, sawed in half, and one half is tossed onto the gigantic bonfire known now as the Canada Revenue Agency. Let me explain? The proceeds of an RRSP or RRIF can roll, tax-free, to a surviving spouse without any tax consequences. In our example, however, there is no spouse to roll the proceeds to. As a result, the full amount of the RRSP or RRIF comes into income in the year of death. What happens when you get a sudden influx of cash? Say, $400,000 worth of cash? Well, first of all it will put you in the very highest tax bracket. Second, you're taxed. (Hence the idea of just sawing that over-sized briefcase in half and tossing one half on the bonfire.) Not convinced. Okay, forget the bonfire idea. Instead, half of the briefcase contents, $200,000 in our example, are put into a box, tied up with a nice red ribbon and hand delivered to ? the Prime Minister. Like that better? Hmm. Well, at least now you know what happens when you die. There's a big fire. There's gnawing and gnashing of teeth. People rushing for exits. And a few, good people, are sitting there calmly because they planned ahead, or had already gone through all of this at some weekend seminar. Strategies do exist to avoid the erosion (torching) of your assets when you die. Talk to your financial advisor. About The Author Rick Hoogendoorn is an 'associate' with Cheri Crause & Associates Inc. . Cheri Crause is a certified financial planner in Victoria, British Columbia. www.chericrause.com
MORE RESOURCES:
Investing - Google News |
|
|
|
RELATED ARTICLES
Reasons For Joining An Investment Club Whether you're a novice investor or an experienced stock picker an investment club may be beneficial to growing your investment portfolio. This article explains what an investment club is, why you should have an investment program and finally why you should join an investment club. How to Choose the Right Share Class You'll want to opt for the no-load or institutional share class instead. If you're a no-load investor who is determined to buy a fund that's primarily broker-sold, go through a supermarket and opt for the D shares. High Volatility Investments Penny stocks and options are high volatility investments that attract both the trader and the long term investor because of the small amount of capital required to make substantial gains as compared with less volatile higher priced stocks. The long term investor buys a stock believing that a company's value will increase over time and the stock price along with it. Basic Options Terms Options are good investing and speculative instruments. But options terminology may confuse even experienced investors. Short Term Savings Products When you invest, it simply means that you are putting your funds in products, in this case short-term savings vehicles, which will allow you to reap high financial rewards.Here is a list of the more common short term savings products you should consider investing in. What is an Investor Ready Business Plan A Business Plan, as all good entrepreneurs starting out in life should know is the foundation, or rather a springboard, towards the establishment and growth of a new business. A business plan is an essential tool for companies raising capital - and your business plan needs to be Investor Ready. Why have Investment Plans for the Stock Market If you do not have an investment plan in the stock market you are subject to impulses, urges, hunches, premonitions, strong feelings, greed, panic, fear, indecision, and just plain foolishness. In my opinion, without a plan, without that clear conception of a total stock market investment strategy, the chances of successful investing in the stock market are pretty slim. Trading Tips No 4: Technical Analysis The Holy Grail Syndrome Everyone knows that the Holy Grail of investing and trading is a myth. Finding a good technical analysis tool that will give you a trading system that wins all the time is called the holy grail of trading. 401(k) Plans I've been in and interested in the stock market so long (one year shy of forty years) I can remember when the mutual fund pages in my home town paper were just one page! Now it looks like there are more mutual funds then there are stocks listed on the New York stock exchange.I wonder how many billions of investor dollars are supporting these funds. Investing 101: Risk Terminology - BETA About thirty years ago, statisticians armed with all of their statistical theories began to confront the financial markets. A handful of useful tools emerged that the average investor should be familiar with when they look to purchase stocks. Investing As A Sport? I said last week that money doesn't generally buy happiness, but the lack of it can buy absolute misery. This, by the way, is not just my personal observation. How to Analyze the Veracity of Investment Newsletters When trying to analyze whether a promotional ad for an investment newsletter or a market timing investment trading system is worthy of investigation, the following questions should be asked:Does the strategy have a track record? Without this you are really allowing your emotions to be in play. All of us want to believe that if someone says something it must be true. Annuity Help Many people today are looking for annuity help. The biggest challenge seems to be that most of the help is biased. Asset Location - Increase Investing Returns & Reduce Your Taxes Location - Once the holy grail only for real estate investors is fast becoming the mantra for every stock, bond, and mutual fund investor. Experts and studies now recognize managing asset location is second only to asset allocation in determining the success of your investment returns. Discipline in Trading and Investing The one thing I can think of that most affects both trading and investing has to be self-discipline.Being disciplined is fully 50% of the job of trading or of investing. Types of Investment The word 'investments' is one that most of us are familiar with hearing in financial context. For many of us, it may make us thing of big business and vasts sums of money, but there's much to the world of investments than multi-million dollar deals. Profitability And Stock Turn Rate The inventory of the typical store represents the largest single element of its total assets. The sale of goods from this inventory is the merchant's chief source of operating profit. Are You An Investment Dummy Like Me? I am good at a few things. I can certainly market well and I consult with others about how to bring more attention to their products and services on the internet for a living. Your Worst Enemy To Successful Investing - The Media How do you make your investment decisions and where do you get your information? If you're like most of the people I know, you look to the experts.That's fine, however it's important to be aware that for every expert, there's an opinion and for every opinion there's an expert. 25 Ways to Find Companies to Buy When you start your program to purchase your "ideal" company, you quickly realize that your ultimate success will depend on two primary skill sets: 1) Your ability to FIND viable companies that are for sale, and 2) Your ability to effectively qualify the potential acquisition investment once found.This article is about only step one, how to creatively find viable companies and one's that are able to be purchased.
|
| home | index |site map |
| © 2006 |
