| The story and example has been retold many times | | | | listed clearly on your last year's personal tax |
| of a son who had taken the time to count up his | | | | assessment from Revenue Canada. If you are |
| parents net worth whom it seemed to be strung | | | | unsure, or want to verify the amount, there is |
| across town in a myriad of small bank accounts and | | | | always a phone number or even an email address to |
| as well in saving bonds. When the son explained to | | | | contact the government agency. |
| his father, the net worth of his wealth in total the | | | | Next contribute as much as you feel that you can |
| father exclaimed - "We're not rich. We never had | | | | spare. Remember a dollar saved or contributed is |
| money". Father the son explained "Did you ever hear | | | | worth more than dollar invested. First there are |
| of the power of compound interest? You had the | | | | definite tax savings. Next the money is sheltered |
| power of compound interest working for you." | | | | from taxable interest. Even if you earned money in |
| Canadians now have the RRSP (Registered | | | | the bank or in Canada savings bonds as interest a |
| Retirement Saving Plan) season on the way. Indeed | | | | good portion would go to pay the taxman, at your |
| few nations on earth allow their citizens such an | | | | highest marginal rates. Most people spend close to |
| investment spiff. Put away income at your time of | | | | their limit. If you do not the funds you will not or |
| highest earning. Allow it to grow and compound over | | | | cannot spend them. An RRSP is a long term savings |
| time, tax free, sheltered of income and growth | | | | plan - not a piggy bank. You can withdraw savings in |
| robbing taxes. The Canadian government is hoping | | | | most cases. However you will pay your current high |
| and betting that first of all you will thus have a nest | | | | tax rates on withdrawals as if was income. It's best |
| egg to live on and not be dependent on social | | | | to leave some savings outside your Registered |
| programs which the government would have to | | | | Retirement Saving Plan. |
| provide to retirees. | | | | Contribute early - both early and earlier in the year |
| This lightens the load for the Canadian government. It | | | | than most. Contribute early in your life in possible. |
| provides for a stable base for investment sources - | | | | This way you have the great and wonderful power |
| for banks and other financial institutions to have a | | | | of compound interest working on your behalf with all |
| stable source of long term investment capital for | | | | its power. |
| mortgages and long term capital investment. The | | | | What are the flip side and the negatives about |
| private investor does pay tax in the end - the | | | | RRSPs? Most people it seems never get around to |
| government does collect it. However its is down the | | | | contributing so this is often the least of most people |
| line when first of all the retiree will generally be taxed | | | | worries. However two points should come to light. As |
| at a lower rate than their peak working years and | | | | with any investments you have the choice of risk |
| the saving fund will have grown considerably with | | | | rewards. If you choose risky investments then pay |
| time and compound interest. Everybody wins so to | | | | heed to the risk factor that you are playing with |
| speak and younger people at that point will benefit | | | | your retirement nest egg. If you are young and have |
| by having other people in their communities with | | | | time to recoup any lost capital that is fine. However |
| money to spend for good and services - providing | | | | if you are on the home stretch don't try to make up |
| employment for the then younger generation. | | | | for lost time or be greedy. |
| What are the basic rules of Rasps for Canadians? | | | | In the end the summary of Canadians investing for |
| First of all know your limits. Its crucial and the first | | | | their retirement nest egg through the vehicle of a |
| step to know how much contribution room you have | | | | Registered Retirement Income RRSP plan ahead , |
| in dollars before sitting down to plan or buy RRSP | | | | save early , save often and contribute as much as |
| financial instrument contributions.. This will actually be | | | | you feel that you can. |