I'm 54 and my wife and I are VERY worried about our future, gas and food prices rising daily. We have had our savings dwindle with the cost of living into the stratosphere, and we are finding it impossible to replace them. We can get by, but can't seem to get ahead. My condolences to anyone retiring in this crisis, 30 years nonstop just for a crooked system to take all you worked for.
I feel your pain mate, as a fellow retiree, I’d suggest you look into passive index fund investing and learn some more. For me, I had my share of ups and downs when I first started looking for a consistent passive income so I hired an expert advisor for aid, and following her advice, I poured $30k in value stocks and digital assets, Up to 200k so far and pretty sure I'm ready for whatever comes.
@@LiamOlivia-4 The crazy part is that those advisors are probably outperforming the market and raising good returns but some are charging fees over fees that drain your portfolio. Is this the case with yours too?
First-time listener: - you explained the concept very well - thank you - issues - you are now more leveraged (good for bad of course) - you have increased the complexity of your portfolio so administration fees will go up Thanks 🙂
Reviewed this again a few months later as a refresher. Really glad you explained "who might suit this sort of investment leveraging strategy. It is a narrow "lane" of people where this would work....or end up not working. I appreciate the visuals in your presentation. For peace of mind, the other meltdown strategy is to shift your RRSP to a RRIF as early as 55 yrs of age and using the percentage calendar withdraw from the RRIF at age 55, the minimum amount, and postpone taking CPP and OAS until age 70...using the meltdown strategy from the percentage calendar as a "bridge" up to age 70. It really all depends on ones risk tolerance...and just how well you can sleep at night knowing you are practicing investment leveraging....there are a lot of "moving parts" when you leverage! Thanks Jacky for your perspective on this topic. Really well thought out regarding presenting the strategy. 💯👍🇨🇦🍁
thank you so much! its ridiculous that not many accountants or retirement expert would suggest this. today i figured out how RRSP is so stupid, because they tax us on income? while non-reg account tax 50% cap gain and much lower rate than income, and eligible dividend is tax free on first 50k!
Very informative video. One way Realestate might work to one's advantage is that there is no actual need to pay Capital gain on it as long as you don't sell it. So don't see once your property is free and clear - Borrow (for Investment) against it and pay zero tax on it. another advantage is you can get insurance for yourself for the value of investment property to pay off any outstanding Taxes when you finally croak and pass on your assets to your heirs.
As an lnvesting enthusiast, I often wonder how top level investors are able to become millionaires off investing. . I’ve been sitting on over $545K equity from a home sale and I’m not sure where to go from here, is it a good time to buy into stocks or do I wait for another opportunity?.
People dismiss the importance of advisors until they are burned by their own emotions. I remember a couple of summers ago, following my lengthy divorce, I needed a good boost to assist my business stay alive, so I looked for qualified consultants and came across someone with the highest qualifications. She has helped me raise my reserve from $275k to $850k, despite inflation.
How can I participate in this? I sincerely aspire to establish a secure financial future and am eager to participate. Who is the driving force behind your success?
I feel like this would have been more useful if the example person wasn't someone with a $100k/year side income at age 71... most people retiring are going to living off some mix of RRSP and TFSA. Would love to see how to reduce tax and reduce clawback in a scenario where those are your two retirement investment vehicles/income sources in retirement.
When you convert your RSP to RIF, you get a $2000 deduction. It can only go against retirement income, RSP income does not count. RIF income can also be split with your spouse. Other than that, any withdrawal from your RSP is considered taxable income. Keeping that income low, keeps your marginal rate low.
If you don't make $100k on the side, then you don;t have to worry about this strategy. you will likely be lower tax bracket and RRSP will not have disadvantages described in the beginning of the video.
@@BusterDarcy Who is going to withdraw $100k/y from their RRSP in retirement and have no other income? Are there even a dozen people in Canada who could fit this description?
I've watched this twice. Comments: Great strategy! For a leveraged investment, I have thought about Private Mortgages and perhaps a Covered Call Dividend ETF (HDIV). Combined they can pay 8-10% p.a. I have seen one strategy where the meltdown occurs through a Special Purpose MIC, where the mortgage investment proceeds go back to your TFSA. It passes the CRA and accountant tests. Same as you describe, except the contents of your RRSP end up in your TFSA account. The investment account grows as you indicate.
Very timely as an early retiree here 54 trying to figure out how to melt down my RRSP in the most tax efficient way and I really like where you are going with this. Two concerns here...first is that I would leave a small amount in RRSP for the pension credit that is available at 65 I believe. Second, you now have a boatload of wealth outside of the RRSP...how to invest without triggering too much income especially for us dividend investors. To pay off the loan you will trigger a sale and capital gains so you now need a loan paydown strategy LOL!
Hi, Jacky , thank you ! question , what is qualified investment product that the interest can be used to deduct income ? rental property , yes . how about ETF and stock ? I heard you have to show CRA that its for income generating .
Hi Jacky! Can you post an updated version of this? Does this meltdown still work if borrowing rates (eg: 7.5%) are approaching or higher than possible returns?
@@JackyKuk Thanks for that... as interest rates come back down I'll for sure want to look into this. We have a good sized RRSP bank and thats good... and bad.
First time watching - Leverage strategy is not a new one and it assumes the investment return will be the same or greater then the interest rate on the loan and that the investment will grow overtime. Need to very careful of the investment and its volatility.
How do you borrow at a good rate? I asked my banker. They said unsecured loans are around 6% and that is before the rate hikes! I tried segregated funds but the return isn't that good given MER as high as 2-3%.
Good video ty. I'd it possible to turn one of a few mutual funds into a riff at 65 and remove 2k a year just from that fund. And at the same time continue to contribute to your other mutual funds which are still RRSPs?
Hi Jacky, regarding the RRIF withdrawal schedule, what is the value of the RRIF? Is the value the cash balance or cash plus stocks, mutual funds , GIC etc in the RRIF? At age 71 and beyond will I be forced to sell my stocks in order to withdraw cash from my RRIF?
Hi, Jacky. I am 75 and my wife 72. We have RIF over $600,000 ($550,000 & $50,000). Me and my wife’s CPP & OAS total are $16,000 & $8,500. What option should we choose for this matter? How much RIF should we withdraw to maximize our benefits?
Hi Peter, this is a question that requires the type of complete retirement planning that we do for clients so I cannot answer you here, you should seek a financial planner for this
I would say he mean comparing to other countries. Public health care in other countries it’s like begging to get ask for your name to be on the waiting list.
Video suggestion: overall, great topics Jacky--when explaining a novel technique with layers of complexity it is better to summarize the "Who Is This For" segment just before the "Basic Method" so that viewers can quickly gauge relevance and then watch the remaining segment with less confusion. Future video: I would be curious to hear your take on Precedence Private Wealth's TFSA "Maximizer Bridge" using mortgage investment companies to drain an RRSP into TFSA via non-arm's length personal mortgage. Best Wishes, V
If I was earning more than 100k a year, the last thing I would be worried about is the OAS clawback. This would be on the same level as someone earning 100,000+ and complaining about their tax bills. Would you rather just earn minimum wage and not have to pay as much taxes?
Thanks @NiceOneBuda dumbest thing I've read in a while, especially the part about how people earning 100k+ shouldn't worry about their tax bills. After all, why would they? (/s) They only pay the most taxes lmao Why the hell would someone who earns an average wage and pays $3k a year in taxes spend their time worrying about taxes? They should be trying to increase their income.
Considering the downside not sure this borrowing strategy is worth the risk. Is there a scenario where you can pay $0 tax dollars on a RRSP withdrawal? Example, Bob retires at 55 and has no other income, he withdraws $15k-20k/yr + tops off what he needs from his TFSA account, and he won't apply for OAS or pension until the age of 70.
@@johnnyv5995 From what I understand: At age 55: 1) Bob can withdraw from his TFSA and the withdrawals are not considered taxable income. So taxable income is $0 so far. 2) He could employ the meltdown strategy and try to make it such that his annual withdrawal from his RRSP/RRIF just matches the personal income amount that is exempt from taxation (effectively around $10-15K depending on the personal income amount at that time, although I imagine this would go up over time). Then he would pay $0 in income tax every year assuming he has no other income source. The problem with over-optimizing to pay exactly $0 tax is that unless your TFSA is huge, Bob's annual income may be insufficient to maintain his preferred lifestyle. Plus maximizing TFSA and minimizing RRSP to force $0 tax on withdrawal on retirement means he lost out on time value of money anyway by being taxed higher when he was making more money from his income in his younger days. I think the better thing to do is optimize net after tax income over your lifetime, which is sort the point of Jacky's video.
@@johnnyv5995 Canada.ca has an awesome retirement calculator which will take into account ur RRSP and TFSA balance and future contributions and lay out a withdrawal strategy including OAS payments. You can adjust your variables to see what scenario brings ur RRSP withdrawl below 26000
Buy a security at high price in RRSP and sell at low price. Wait for 30 days with a hope that the security will not go up and then buy same security in TFSA. That way you can drain your entire RRSP. 🤞🤞🤞🤞 Very dangerous.
Sounds like a great idea if managed properly. Wondering where to borrow the leveraged money when starting if one doesn't anything serves as collateral?
Question: I still have a mortgage to be paid off at retirement 65 age, can I use my RRSP fund to pay off this mortgage and not pay any tax for the RRSP withdrawn? Thanks
There are several points to be noted here - 1. The interest on borrowed money can be written off against income ONLY if the investment generates meaningful interest or dividends. CRA explicitly states that - If the only earnings your investment can produce are capital gains, you cannot claim the interest you paid. You may need to provideT5 with your income tax return. 2. In the example, if you are paying off borrowed money in a single go, then the sold securities may trigger hefty capital gain, attracting huge tax bill and burning a sizable hole in your pocket. 3. Capital gains are triggered at the time of selling (liquidating) the securities and NOT at the time of withdrawal from your non registered trading account. In effect, you need to liquidate your assets progressively, include repayment of borrowed money. I am not saying that what you said is incorrect, but need to look at the tax code closely prior to jumping in with both feet.
You should be able to leave your money in your rrsp and take it out as necessary instead of having to start a rif at age 71 and take out mandated amounts whether you need it or not in any particular year.That seems fair to me.
Why does no channel look at the scenario where GIS is involved? That is why I am melting down my RRSPs in my early 60s, when I am in the lowest tax bracket anyway, so that I am not forced to have RRIF income that could affect my eligibility for non-taxable, free government money that is the GIS.
GIS is difficult to achieve even fi you are melting down a smaller size RRSP, usually planners do not assume people can get GIS unless it's very very certain
This scenario sounds neat but how do you have that borrowed money invested? In a non registered account? Wouldn't you be paying tax twice on that scenario with capital gains and yearly distributions/dividends from your holdings? Plus you'd have to hope that the market doesn't correct while you hold your investments on borrowed money because then you'd be paying a guaranteed interest to borrowed annually with an account that can take potentially a few years to even come back to even $. This is just my thoughts/fears to play devils advocate for your suggestion.
Wondering what you would recommend for me. I’m 53 have 1 million in RRSPs. House paid off and plan to work for another two years before I retire but not sure if I melt down the RRSPs in its entirety then take the CPP and OAs
it would be too difficult and tight to meltdown such amount, unless you plan to take it at 71. You also need to consider risk tolerance + other income, just 1mil rrsp alone would not affect oas. Better speak to financial planner about this
Hey, there is a way that you can leverage your house to tanner your RRSP into TFSA interest. Make your RRSP a primary mortgage holder on your house and the TFSA the secondary mortgage holder. I will link the strategy by the guy who told me about it.
Nice video Jacky Kuk. I have started a variation where I melt x of my rrsp per year, my lower tax bracket spouse melts 2x of hers, and I contribute x to a spousal, canceling the income for me.
How about incorporating and directing your revenues to your corp (you therefore only make the income you want your corps to pay you). When you approach the 71 age deadline, you stop giving yourself a salary and simply take out your RRSP as income at the lowest tax bracket. More accounting fees but way less leverage, no?
Could work but another question would be what to do with corp excess money, normally investing incur passive income which is highest tax. There are ways to help get around this but its still soemthing to consider
Is it beneficial for me to contribute to my RRSP each year and get the annual tax break while still doing the meltdown strategy? I'm being beat up on taxes as it is when you add my annual passive income and regular income. Currently I do have capital gains, but they are infrequent because the capital gains investments that pay the most span 3 to 5 years. On those years when the capital gains come in I get shredded at tax time...
great vid. I am still working and contributing to a 2nd RRSP (via work) while my 1st RSP is healthy and sitting waiting for retirement. Can I withdraw from one RSP as described in this video while contributing to the other RSP?
you can claim interest on any borrowed fund use towards improving home for purpose of generating income. But if you are flipping then technically you are not living there, need to becareful on your home buyer plan RRSP withdrawal
I’ve been waiting for a year for a hip replacement surgery… let’s remove great health care from that list which makes it 3 negatives.. high taxes, high housing prices, terrible ( NOT FREE) health care.
I have a question regarding how the income from RRSP withdrawal of $7000 can cancel out the $7000 interest of 3.5% on the $200,000 loan? Can we just expense the interest from our investment loan?
You shouldn’t have to collapse your rrsp but rather leave your money there and withdraw it as you see fit rather than have to withdraw it as mandated by the govt.That would be a real retirement plan. That seems fair to me anyway since whatever you have left is taxed anyway.
Amazing explanation. Thank you very much. A quick question. Can I offset interest expense to income (withdrawal from RRSP) with no issues with the CRA?
So where is the advantage? I’m still getting income in the Non-registered account. Capital gains don’t count. There has to be something like a dividend or interest payment - or at least the *prospect* of same - to pass the CRA smell test as far as I know. Leveraging is dead anyway, but I wouldn’t risk this scenario.
Writing off leveraged investment interest is a great strategy, but the reason the one outpaces the other is largely because using leverage to invest will always yield more than not using leverage assuming you aren't margin called or forclosed by overextending.
I have 900k brokerage so if I by 2million VCN at 4% on margin I will have 80k a year borrow to invest interest cost. Because of the Canadian divided tax credit this is net ~80k. So basically I can make 100k a year at my job and not any tax since I have RRSP deduction 80k borrow to invest interest cost and my personal exemption amount? That’s crazy I will never have to pay tax again why doesn’t everyone do this?
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Not sure what the deal is with me but I am 30 years away from hitting retirement and my RRSP (SDRSP) is at 200K CAD ... What's the point for me to keep tossing money in there other than a little bit of a tax break, I'd be better off just stop my annual contribution to the RRSP and invest in a regular account while dealing with the regular capital gains taxes.
Assuming you dont need the money until retirement You should take the extra in tax saving every year and assume invest in tfsa at 6% a year, see what is the difference in total account value. Yes you do need to pay income tax but you still could be coming out ahead
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@@JackyKuk Well my TFSA is maxed out, I don't need the money right now but would consider acquiring real-estate. I've made 13-17% return on RRSPs when I was forced to stay with our employer's RRSP mutual fund's broker. Then I left and asked for my entire RRSP to be transferred into a SDRSP. I was up about 40% last year and 55% this year. I don't ever expect these performance to be repeated indefinitely but I also don't want to end-up with $4M on my RRSP at 55 years old and basically wait until I am too old to even be able to spend any of it.
@@JackyKuk thanks for quick reply.. I know full answer is not possible here, but do you still recommend to contribute to rrsp every year when somebody is sure that he or she will move out of Canada in 5 years or 10years from the first year it started rrsp? I guess there is a penalty if i withdraw after 5 or 10years if i move out of canada which would be much before my retirement
@@akhere4279 If you are moving out in less than 10 years and are not near retirement, I wouldn't put it into an RSP. You may need that money before retirement and now you've trapped it in an account facing both non-resident taxes and whatever the tax rate is in the country you move to.
@@paulnieuwland3460 thanks Paul. What if the country I move to has dual Tax treaty with Canada? Will I still pay two taxes told by you - Non resident tax in Canada and Tax in country of move??
@@akhere4279 If you're moving to a low tax country, the withholding tax levied by CRA may be less than your marginal rate back in Canada plus whatever you'd pay in your new country. So obviously it depends.
Jacky, I think we need to talk as I’m not completely understanding this strategy. I am 52 and I have a high income of around $250K/yr. I currently have about $750K in RRSPs and add about $50K per year to it. Overall, my total investment portfolio is worth of over $1M. I also own 4 investment properties(adding a 5th one this year) in addition to my principal residence. I am quite concerned about my the tax implications when it comes time for me to withdraw my RRSPs which I suspect will be well in excess of $1M by 71 years of age. What’s the best way for us to set up an introductory call?
Congratulations but given your sizeable investments. I think you should be worried about enjoying the fruits of your labour rather than minimize your tax.
@@lvjuventus you are right, enjoy every moment when you can or you will regret it. With that amount you better retire early right now, first to enjoy, second reduction tax implications
@@lvjuventus Why are you of the mindset that these things are mutually exclusive? Do you think it's impossible for him to enjoy his retirement and also reduce the taxes he is paying?
Pls reach out to a licensed financial advisor who offers a fee for advice model. They will have a fiduciary duty, and you can look up their credentials and professional history. This will offer you much more protection than taking advice from a random stranger on the internet.
No rsp is gonna pay 7% a year for 20 years! Also, if u borrow money to invest, not only do u pay interest on the loan, you also pay tax on income earned
Did I miss it, or did you just not include the tax payable (capital gains) when you pay off your loan's principal? If you need to pay off a $200k loan, then you'll likely have to sell somewhere around $250k to cover the tax due on your gains. That will significantly skew the remaining amount in your non-reg fund. Not saying it doesn't work out to your benefit in the end... but this is a significant missing value that diminishes the overall return.
i think he just demonstrated paying off the interest on the secured LOC (not the actual LOC principal)... as long as you pay off the interest most lenders won't really mess with you as long as your credit and credit ratios remain strong...., he also didn't show any yearly T5 income (which would also probably occur)
You dont need to sell it all in real life though, you can deleverage over 3-5 years. Also even if you sell all the tax burden is less than paying the income and getting less OAS in some cases. This is not a strategy for everyone as i have mentioned
@@JackyKuk Why wouldn't you convert part of your RRSP to a RRIF to avoid withholding taxes versus taking a lump sum? You would then have to continue to take the minimum amount every year from the RRIF however you could set up multiple accounts to do this to effectively collapse your RRSP
@@drizzt1970cabecause it goes by the total amount you take out across all reg accounts. You also cannot partially convert one account. Remember you do have to account for everything you do each year.
Maybe don't promote a 2% savings account as if it's a good option, which it isn't. I get the need for sponsorship, but perhaps only push worthwhile choices
@@JackyKuk Except the dividend is grossed up and if you are drawing OAS, you just lost all of it instead of some or none. Your million bucks in your investment income could be generating $40,000 of dividend, which grossed up is closer to $55,000. Add that to your income and you just gave back all of your OAS. Your strategy ignores the income from the investment account - which is a requirement of the investment to write off the interest. You cannot invest just in capital gains. And dividends are not more efficient than income after a certain level. It depends on the amount of dividend income and your tax rate. Your answer is too simple and is going to lead someone to make a major error based on your simple math.
Jacky, for a young investor with a projected income of less than 80K at retirement, would you recommend to invest heavy on a TFSA instead of an RSP account?
@@jp8479 At $100K then RRSP. You'll save 40% at your marginal tax rate, but in retirement, probably drop to 33% and have options for income splitting if you are married when you retire. The TFSA will also limit what you invest in, as the tax treaty with the USA, for example, covers retirement funds but not your TFSA. Invest in Apple, and get a dividend in your TFSA and you will see a US withholding tax. That won't happen in your RRSP.
I am watching your video on youtube and I can't have access to join your group. Can you contact me ? I am planning to retire and after watchung your video, I am excited to learn more and plan better.
When so are saying "RRSP withdrawals" are you referring to the RRIF, because I didn't hear to mention the withholding tax that is associated with RSP withdrawals.
Your introduction is incorrect. The three things you mention are not what Canada is most know for. You may have been thinking of the Nordic countries, and Hong Kong, in the case of expensive real estate. Here are some of things Canada is most know for: Hockey, Maple syrup, Tim Hortons, Poutine, Niagara Falls, Indigenous culture, Multiculturalism, National parks, etc.
Is anyone interested in playing with high leverage in older years? Leverage cuts both ways, especially when the market goes down. Bob is going to die of heart attack prematurely. It might work out for his family if he has a big life insurance. Nuts.
CORRECTION !!!!! The RRSP does not not turn into a RRIF automatically at age 71. An RRSP must be converted to a RRIF or annuity, or paid out in a lump sum by the end of the calendar year in which you turn age 71. If you don't transfer your RRSP to another registered plan, like an annuity or registered retirement income fund (RRIF) before then, the CRA will treat your entire RRSP savings as income in that year. The tax hit could be substantial. ...
Correction!!! This absolutely depends on where your RRSP is held. Banks WILL absolutely convert your RSP to a RIF setting withdrawals at minimum cra reg amounts per age by Dec 31st of the year you turn 71 IF you have not done it yourself. This occurs automatically.
I liked your idea very However, I prefer a hybrid approach between drawing down just the interest and everything. For people without private pensions, I am planning around the $2000 pension credit you can get if you convert your RSP to a RRIF by age 65. Assuming we all hope to live to at least 85, God willing, that's $40000 spread out over 20 years. So maybe keep $30-35000 in your RRSP/RSPs by doing a partial. conversion. That's my plan for now. What do you think?
Your not saving anything on taxes, the 7k in interest payment could have been written off against his current 100k passive or active income, there would only be a tax advantage to this if his only income was coming from the rrsp melt and nothing else
@@mik272727 Exactly. To write off that interest you need income. If his strategy generates dividend income, that gets grossed up BEFORE the OAS clawback is calculated. He also states OAS claw back is calculated on net income - it isn't. It is on gross. So when you gross up your dividend income on this investment income, you are about to lose your OAS - and all the benefits of this strategy
Just a comment on the intro about Canada taxation. We are mid-pack compared to OECD countries for taxes vs GDP and 8th overall in income taxes specifically. We are much lower in terms of consumption taxes. Most Canadians will only use the US for comparison which I don’t think is valid considering the difference in the way government revenue is spent. For retired people of modest means, the taxation scheme in Canada is very reasonable. Favourable taxes on primary residences and no inheritance tax should also be included in the discussion. It’s also important to point out that claiming interest for investments can be tricky. Also, CRA is expecting the investment to provide on going returns such as dividends or capital gains. It gets complicated with buy and hold investments. Luckily regular ETFs are fine for this strategy.
Makes sense but unfortunately only saves $2/3k yrs in tax . Easier to Rrif earlier (55) split with your wife or just make less money.(not to mention the risk and work)
I'm 54 and my wife and I are VERY worried about our future, gas and food prices rising daily. We have had our savings dwindle with the cost of living into the stratosphere, and we are finding it impossible to replace them. We can get by, but can't seem to get ahead. My condolences to anyone retiring in this crisis, 30 years nonstop just for a crooked system to take all you worked for.
I feel your pain mate, as a fellow retiree, I’d suggest you look into passive index fund investing and learn some more. For me, I had my share of ups and downs when I first started looking for a consistent passive income so I hired an expert advisor for aid, and following her advice, I poured $30k in value stocks and digital assets, Up to 200k so far and pretty sure I'm ready for whatever comes.
@@LiamOlivia-4 That's actually quite impressive, I could use some Info on your FA, I am looking to make a change on my finances this year as well
@@johnawara9719 My advisor is MARGARET MOLLI ALVEY;
You can look her up online
@@LiamOlivia-4 The crazy part is that those advisors are probably outperforming the market and raising good returns but some are charging fees over fees that drain your portfolio. Is this the case with yours too?
First-time listener:
- you explained the concept very well - thank you
- issues
- you are now more leveraged (good for bad of course)
- you have increased the complexity of your portfolio so administration fees will go up
Thanks 🙂
Thanks, actually complexity wont really increase, we don't need to add a lot of accounts for this to work
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Not really complex. You could probably invest in the same assets you're holding in the RRSP.
This is an eye opening information! Probably not for me but it is still interesting to learn
Reviewed this again a few months later as a refresher. Really glad you explained "who might suit this sort of investment leveraging strategy. It is a narrow "lane" of people where this would work....or end up not working. I appreciate the visuals in your presentation. For peace of mind, the other meltdown strategy is to shift your RRSP to a RRIF as early as 55 yrs of age and using the percentage calendar withdraw from the RRIF at age 55, the minimum amount, and postpone taking CPP and OAS until age 70...using the meltdown strategy from the percentage calendar as a "bridge" up to age 70. It really all depends on ones risk tolerance...and just how well you can sleep at night knowing you are practicing investment leveraging....there are a lot of "moving parts" when you leverage! Thanks Jacky for your perspective on this topic. Really well thought out regarding presenting the strategy. 💯👍🇨🇦🍁
+̇①⑥⑥⑨ ②⑤⑧ ④③⑥③
❤️❤️📥
Great simple way of explaining it without embellishing the scenario that you presented
thank you so much!
its ridiculous that not many accountants or retirement expert would suggest this. today i figured out how RRSP is so stupid, because they tax us on income? while non-reg account tax 50% cap gain and much lower rate than income, and eligible dividend is tax free on first 50k!
Great video and content. Thanks for getting to the points.
Very informative video. One way Realestate might work to one's advantage is that there is no actual need to pay Capital gain on it as long as you don't sell it. So don't see once your property is free and clear - Borrow (for Investment) against it and pay zero tax on it. another advantage is you can get insurance for yourself for the value of investment property to pay off any outstanding Taxes when you finally croak and pass on your assets to your heirs.
+̇①⑥⑥⑨ ②⑤⑧ ④③⑥③.
❤️❤️📥,
As an lnvesting enthusiast, I often wonder how top level investors are able to become millionaires off investing. . I’ve been sitting on over $545K equity from a home sale and I’m not sure where to go from here, is it a good time to buy into stocks or do I wait for another opportunity?.
Well as you know bigger risk, bigger results, but such impeccable high-value trades are often carried out by pros.
People dismiss the importance of advisors until they are burned by their own emotions. I remember a couple of summers ago, following my lengthy divorce, I needed a good boost to assist my business stay alive, so I looked for qualified consultants and came across someone with the highest qualifications. She has helped me raise my reserve from $275k to $850k, despite inflation.
How can I participate in this? I sincerely aspire to establish a secure financial future and am eager to participate. Who is the driving force behind your success?
My CFA NICOLE ANASTASIA PLUMLEE a renowned figure in her line of work. I recommend researching her credentials further.
Thank you for this amazing tip. I just looked the name up and wrote her.
I feel like this would have been more useful if the example person wasn't someone with a $100k/year side income at age 71... most people retiring are going to living off some mix of RRSP and TFSA. Would love to see how to reduce tax and reduce clawback in a scenario where those are your two retirement investment vehicles/income sources in retirement.
When you convert your RSP to RIF, you get a $2000 deduction. It can only go against retirement income, RSP income does not count. RIF income can also be split with your spouse. Other than that, any withdrawal from your RSP is considered taxable income. Keeping that income low, keeps your marginal rate low.
If you don't make $100k on the side, then you don;t have to worry about this strategy. you will likely be lower tax bracket and RRSP will not have disadvantages described in the beginning of the video.
@@OscarHanzely you could zero side income and have a $100k/y withdrawal income from your RRSP which would mean a hefty tax bill in retirement.
@@BusterDarcy Who is going to withdraw $100k/y from their RRSP in retirement and have no other income? Are there even a dozen people in Canada who could fit this description?
@@OscarHanzely It will if you want to qualify for the GIS
I've watched this twice. Comments: Great strategy! For a leveraged investment, I have thought about Private Mortgages and perhaps a Covered Call Dividend ETF (HDIV). Combined they can pay 8-10% p.a. I have seen one strategy where the meltdown occurs through a Special Purpose MIC, where the mortgage investment proceeds go back to your TFSA. It passes the CRA and accountant tests. Same as you describe, except the contents of your RRSP end up in your TFSA account. The investment account grows as you indicate.
That is a very aggressive approach that will likely be shut down soon
Very timely as an early retiree here 54 trying to figure out how to melt down my RRSP in the most tax efficient way and I really like where you are going with this. Two concerns here...first is that I would leave a small amount in RRSP for the pension credit that is available at 65 I believe. Second, you now have a boatload of wealth outside of the RRSP...how to invest without triggering too much income especially for us dividend investors. To pay off the loan you will trigger a sale and capital gains so you now need a loan paydown strategy LOL!
True however you can do systematic sale to spread cap gain
at 5:37, you say OAS clawback is based on "net income after tax". but it is in fact based on taxable income.
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Good ideas and great explanations.
I would use Pension Splitting from RRIF withdrawal exceeding the min. Withdrawal rate to get around the OAS Clawback for the couple.
assuming you are married...this strategy works for a single person or a married couple.
Great idea! Thanks for sharing!
Hi, Jacky , thank you ! question , what is qualified investment product that the interest can be used to deduct income ? rental property , yes . how about ETF and stock ? I heard you have to show CRA that its for income generating .
Any investment that generates any income or dividend generally. However do check with cpa!
@@JackyKuk thanks !
Great job explaining!
Hi Jacky! Can you post an updated version of this? Does this meltdown still work if borrowing rates (eg: 7.5%) are approaching or higher than possible returns?
Its much less ideal but its too case specific to really say
@@JackyKuk Thanks for that... as interest rates come back down I'll for sure want to look into this. We have a good sized RRSP bank and thats good... and bad.
Great explanation
Great idea, thank you!
I have to watch this again - definitely for me.
how do I melt down my RRSP if I want to retire in 4 years
Wow, really interesting idea! Do you also have any suggestions for tax savings for Canadians without any RRSPs?
First time watching - Leverage strategy is not a new one and it assumes the investment return will be the same or greater then the interest rate on the loan and that the investment will grow overtime. Need to very careful of the investment and its volatility.
How do you borrow at a good rate? I asked my banker. They said unsecured loans are around 6% and that is before the rate hikes! I tried segregated funds but the return isn't that good given MER as high as 2-3%.
investment loans should be prime + 1% usually, 6% before rate hike is crazy!
Good video ty. I'd it possible to turn one of a few mutual funds into a riff at 65 and remove 2k a year just from that fund. And at the same time continue to contribute to your other mutual funds which are still RRSPs?
Hi Jacky, regarding the RRIF withdrawal schedule, what is the value of the RRIF? Is the value the cash balance or cash plus stocks, mutual funds , GIC etc in the RRIF? At age 71 and beyond will I be forced to sell my stocks in order to withdraw cash from my RRIF?
its total acc value, you can instruct where specifically to sell ie Cash
Hi, Jacky. I am 75 and my wife 72. We have RIF over $600,000 ($550,000 & $50,000). Me and my wife’s CPP & OAS total are $16,000 & $8,500. What option should we choose for this matter? How much RIF should we withdraw to maximize our benefits?
Hi Peter, this is a question that requires the type of complete retirement planning that we do for clients so I cannot answer you here, you should seek a financial planner for this
LOL- Healthcare ! The funniest thing I ever heard! The guy probably never been in the waiting line in the hospital!
I would say he mean comparing to other countries. Public health care in other countries it’s like begging to get ask for your name to be on the waiting list.
Try finding a doctor here on Vancouver Island lol. Horrible health care.
Video suggestion: overall, great topics Jacky--when explaining a novel technique with layers of complexity it is better to summarize the "Who Is This For" segment just before the "Basic Method" so that viewers can quickly gauge relevance and then watch the remaining segment with less confusion. Future video: I would be curious to hear your take on Precedence Private Wealth's TFSA "Maximizer Bridge" using mortgage investment companies to drain an RRSP into TFSA via non-arm's length personal mortgage. Best Wishes, V
Could you update the figures to reflect the possibility of an increase in capital gains tax as proposed by the Liberal Government?
Its likely no impact because the new inclusion only happens past 250k!
If I was earning more than 100k a year, the last thing I would be worried about is the OAS clawback. This would be on the same level as someone earning 100,000+ and complaining about their tax bills. Would you rather just earn minimum wage and not have to pay as much taxes?
If you can earn 100k and also keep your oas why not?
I have a friend (retired) who worries about OAS clawback a lot. Guess what - they'll just pay more when they die
Thanks @NiceOneBuda dumbest thing I've read in a while, especially the part about how people earning 100k+ shouldn't worry about their tax bills. After all, why would they? (/s) They only pay the most taxes lmao
Why the hell would someone who earns an average wage and pays $3k a year in taxes spend their time worrying about taxes? They should be trying to increase their income.
Considering the downside not sure this borrowing strategy is worth the risk. Is there a scenario where you can pay $0 tax dollars on a RRSP withdrawal? Example, Bob retires at 55 and has no other income, he withdraws $15k-20k/yr + tops off what he needs from his TFSA account, and he won't apply for OAS or pension until the age of 70.
Yep thats exactly why its not suitable for lower passive and retirement income people
@@JackyKuk Hope you can answer the second part of my question - thanks.
@@johnnyv5995 From what I understand:
At age 55:
1) Bob can withdraw from his TFSA and the withdrawals are not considered taxable income. So taxable income is $0 so far.
2) He could employ the meltdown strategy and try to make it such that his annual withdrawal from his RRSP/RRIF just matches the personal income amount that is exempt from taxation (effectively around $10-15K depending on the personal income amount at that time, although I imagine this would go up over time).
Then he would pay $0 in income tax every year assuming he has no other income source.
The problem with over-optimizing to pay exactly $0 tax is that unless your TFSA is huge, Bob's annual income may be insufficient to maintain his preferred lifestyle.
Plus maximizing TFSA and minimizing RRSP to force $0 tax on withdrawal on retirement means he lost out on time value of money anyway by being taxed higher when he was making more money from his income in his younger days.
I think the better thing to do is optimize net after tax income over your lifetime, which is sort the point of Jacky's video.
@@johnnyv5995 Canada.ca has an awesome retirement calculator which will take into account ur RRSP and TFSA balance and future contributions and lay out a withdrawal strategy including OAS payments. You can adjust your variables to see what scenario brings ur RRSP withdrawl below 26000
@@momgrammer5265 Thanks, I will try to find it.
How to transfer $$ from RRSP to TFSA without being taxed? Any video available on this topic?
Buy a security at high price in RRSP and sell at low price. Wait for 30 days with a hope that the security will not go up and then buy same security in TFSA.
That way you can drain your entire RRSP. 🤞🤞🤞🤞
Very dangerous.
Dream on!
Sounds like a great idea if managed properly. Wondering where to borrow the leveraged money when starting if one doesn't anything serves as collateral?
There are investment loans from places like B2B bank or your regular bank, just pay attention to interest rate, P+0.5% would be ideal
Obviously you'd need something to serve as collateral, e.g., your house
Question: I still have a mortgage to be paid off at retirement 65 age, can I use my RRSP fund to pay off this mortgage and not pay any tax for the RRSP withdrawn? Thanks
Nope unless its a rental
Thank you for all of this.👍🇨🇦🍁
There are several points to be noted here -
1. The interest on borrowed money can be written off against income ONLY if the investment generates meaningful interest or dividends. CRA explicitly states that - If the only earnings your investment can produce are capital gains, you cannot claim the interest you paid.
You may need to provideT5 with your income tax return.
2. In the example, if you are paying off borrowed money in a single go, then the sold securities may trigger hefty capital gain, attracting huge tax bill and burning a sizable hole in your pocket.
3. Capital gains are triggered at the time of selling (liquidating) the securities and NOT at the time of withdrawal from your non registered trading account. In effect, you need to liquidate your assets progressively, include repayment of borrowed money.
I am not saying that what you said is incorrect, but need to look at the tax code closely prior to jumping in with both feet.
100% agree
You should be able to leave your money in your rrsp and take it out as necessary instead of having to start a rif at age 71 and take out mandated amounts whether you need it or not in any particular year.That seems fair to me.
Why does no channel look at the scenario where GIS is involved? That is why I am melting down my RRSPs in my early 60s, when I am in the lowest tax bracket anyway, so that I am not forced to have RRIF income that could affect my eligibility for non-taxable, free government money that is the GIS.
GIS is difficult to achieve even fi you are melting down a smaller size RRSP, usually planners do not assume people can get GIS unless it's very very certain
This scenario sounds neat but how do you have that borrowed money invested? In a non registered account? Wouldn't you be paying tax twice on that scenario with capital gains and yearly distributions/dividends from your holdings? Plus you'd have to hope that the market doesn't correct while you hold your investments on borrowed money because then you'd be paying a guaranteed interest to borrowed annually with an account that can take potentially a few years to even come back to even $. This is just my thoughts/fears to play devils advocate for your suggestion.
how to open rrsp meltdown investment account? which bank has this kind of service? i talked to bmo, they never heard of this kind of a ccount.
Its not an account, its a strategy you apply to your existing rrsp account
When withdrawing from RRSP before 71, withholding taxes are deducted. How does meltdown help when taxes already deducted up front
You get it back at tax filing
What about the tax cost of not contributing and the tax on the growth in the non-registered account over the 20 years?
Wondering what you would recommend for me. I’m 53 have 1 million in RRSPs. House paid off and plan to work for another two years before I retire but not sure if I melt down the RRSPs in its entirety then take the CPP and OAs
it would be too difficult and tight to meltdown such amount, unless you plan to take it at 71. You also need to consider risk tolerance + other income, just 1mil rrsp alone would not affect oas. Better speak to financial planner about this
Hey, there is a way that you can leverage your house to tanner your RRSP into TFSA interest.
Make your RRSP a primary mortgage holder on your house and the TFSA the secondary mortgage holder. I will link the strategy by the guy who told me about it.
Its call tfsa maximizer and its illegal in canada cra warned of this
Thanks for the information
I don't understand, why, after 20 years, he is still owing the same amount he borrowed originally?
He never paid principal, only interest
Nice video Jacky Kuk. I have started a variation where I melt x of my rrsp per year, my lower tax bracket spouse melts 2x of hers, and I contribute x to a spousal, canceling the income for me.
How about incorporating and directing your revenues to your corp (you therefore only make the income you want your corps to pay you). When you approach the 71 age deadline, you stop giving yourself a salary and simply take out your RRSP as income at the lowest tax bracket. More accounting fees but way less leverage, no?
Could work but another question would be what to do with corp excess money, normally investing incur passive income which is highest tax. There are ways to help get around this but its still soemthing to consider
good stuffs, very complicated.
will you talk something about spousal RRSP, just will it be very different if you use srrsp instead of rrsp? Thanks.
Similar just remember the 3 yrs no contribution rule if you plan to draw
Is it beneficial for me to contribute to my RRSP each year and get the annual tax break while still doing the meltdown strategy? I'm being beat up on taxes as it is when you add my annual passive income and regular income. Currently I do have capital gains, but they are infrequent because the capital gains investments that pay the most span 3 to 5 years.
On those years when the capital gains come in I get shredded at tax time...
It can be beneficial yes
You said you can convert to a rrif at any time. I don't think that's true. Don't you have to wait til 55?
Nope no minimum to convert only maximum
great vid. I am still working and contributing to a 2nd RRSP (via work) while my 1st RSP is healthy and sitting waiting for retirement. Can I withdraw from one RSP as described in this video while contributing to the other RSP?
Yes but make sure you work with an accountant and advisor to see if its suitable for you first before taking actiob
I’m 28 yrs old and I want to withdraw my rrsp, how do I go about or what are the implications
will be added to your taxable income, if total draw under 5k there is 10% withholding tax, 5-15k is 20%, 15k+ is 30% withholding tax
@@JackyKuk so you saying every paycheque, they are gonna deduct an additional tax from my pay?
So you are basically taking on risk using leverage for the price of tax payments on RRSP withdrawals.
Yep
I dont use FB. Do you have Discord channel for members? Wanted to chat with and be friend with other like minded people or tax professional. Thank you
No sorry only fb!
If I borrow the money to buy the fist home and reno it and flip the house, can I still claim the interest and reduce the tax on RRSP withdrawal?
you can claim interest on any borrowed fund use towards improving home for purpose of generating income. But if you are flipping then technically you are not living there, need to becareful on your home buyer plan RRSP withdrawal
Investment risk on Borrowed fund is not factored in.
Which is why i said multiple times leverage is not for everyone
What about melting down RRSPs into TFSA?
you can do that as well, but room is quite limited
I’ve been waiting for a year for a hip replacement surgery… let’s remove great health care from that list which makes it 3 negatives.. high taxes, high housing prices, terrible ( NOT FREE) health care.
I have a question regarding how the income from RRSP withdrawal of $7000 can cancel out the $7000 interest of 3.5% on the $200,000 loan? Can we just expense the interest from our investment loan?
Yes of course. that's the point. The $7k RRSP withdrawal is negated by the $7k interest on the $200k loan.
You shouldn’t have to collapse your rrsp but rather leave your money there and withdraw it as you see fit rather than have to withdraw it as mandated by the govt.That would be a real retirement plan. That seems fair to me anyway since whatever you have left is taxed anyway.
Amazing explanation. Thank you very much. A quick question. Can I offset interest expense to income (withdrawal from RRSP) with no issues with the CRA?
Yes as long as interest is incurred for income purpose in a non reg investment
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So where is the advantage? I’m still getting income in the Non-registered account. Capital gains don’t count. There has to be something like a dividend or interest payment - or at least the *prospect* of same - to pass the CRA smell test as far as I know. Leveraging is dead anyway, but I wouldn’t risk this scenario.
@@Imsosmrt1999 Income in the non-registered account is favourably taxed relative to withdrawals from the RRSP.
I don't understand this 100 percent but I plan on having over a million in rrsp by the time I'm 65. Something to consider .
Writing off leveraged investment interest is a great strategy, but the reason the one outpaces the other is largely because using leverage to invest will always yield more than not using leverage assuming you aren't margin called or forclosed by overextending.
How can you write off $7k while investing in RSP???
sorry, can someone let me know where is the link to join the private group?
Should be in every video’s description under “useful link”
What do you think about this strategy?
Hi Jacky.
What happens to my rrsp if I move out of Canada before retirement or after the retirement?
It felt a little off that you didn’t address the capital gains tax due when you describe paying off the borrowing account.
I have 900k brokerage so if I by 2million VCN at 4% on margin I will have 80k a year borrow to invest interest cost. Because of the Canadian divided tax credit this is net ~80k. So basically I can make 100k a year at my job and not any tax since I have RRSP deduction 80k borrow to invest interest cost and my personal exemption amount? That’s crazy I will never have to pay tax again why doesn’t everyone do this?
Not sure what the deal is with me but I am 30 years away from hitting retirement and my RRSP (SDRSP) is at 200K CAD ... What's the point for me to keep tossing money in there other than a little bit of a tax break, I'd be better off just stop my annual contribution to the RRSP and invest in a regular account while dealing with the regular capital gains taxes.
Assuming you dont need the money until retirement You should take the extra in tax saving every year and assume invest in tfsa at 6% a year, see what is the difference in total account value. Yes you do need to pay income tax but you still could be coming out ahead
@@JackyKuk Well my TFSA is maxed out, I don't need the money right now but would consider acquiring real-estate. I've made 13-17% return on RRSPs when I was forced to stay with our employer's RRSP mutual fund's broker. Then I left and asked for my entire RRSP to be transferred into a SDRSP. I was up about 40% last year and 55% this year. I don't ever expect these performance to be repeated indefinitely but I also don't want to end-up with $4M on my RRSP at 55 years old and basically wait until I am too old to even be able to spend any of it.
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There you are the you tuber how showed me maybe you can make a video that you can explain it so cleanly
When withdraw $7000 from RRSP, how I can tell RAC if it's normal RRSP withdraw, or it's Capital gain?
Theres no telling you just draw, you will get hit with withholding tax and if any excess will be returned back to you come tax filing
would you talk about RPP,LIAR,RIF etc? Thank you
Hi Jacky.
What happens to my rrsp if I move out of Canada before retirement or after retirement??
It stays as rrsp but your withdrawal counts as non resident and subject to NR withholding tax. You have to file tax to get it back
@@JackyKuk thanks for quick reply.. I know full answer is not possible here, but do you still recommend to contribute to rrsp every year when somebody is sure that he or she will move out of Canada in 5 years or 10years from the first year it started rrsp?
I guess there is a penalty if i withdraw after 5 or 10years if i move out of canada which would be much before my retirement
@@akhere4279 If you are moving out in less than 10 years and are not near retirement, I wouldn't put it into an RSP. You may need that money before retirement and now you've trapped it in an account facing both non-resident taxes and whatever the tax rate is in the country you move to.
@@paulnieuwland3460 thanks Paul.
What if the country I move to has dual Tax treaty with Canada?
Will I still pay two taxes told by you - Non resident tax in Canada and Tax in country of move??
@@akhere4279 If you're moving to a low tax country, the withholding tax levied by CRA may be less than your marginal rate back in Canada plus whatever you'd pay in your new country. So obviously it depends.
The RIF minimum calculation is 1/(90-age) as a percentage.
Not any more. It’s now more complicated.
@@drlindberg5372 That works only until you are about 70ish and then it changes. At 95 you are at 20% and that is the max.
Jacky, I think we need to talk as I’m not completely understanding this strategy. I am 52 and I have a high income of around $250K/yr. I currently have about $750K in RRSPs and add about $50K per year to it. Overall, my total investment portfolio is worth of over $1M. I also own 4 investment properties(adding a 5th one this year) in addition to my principal residence. I am quite concerned about my the tax implications when it comes time for me to withdraw my RRSPs which I suspect will be well in excess of $1M by 71 years of age. What’s the best way for us to set up an introductory call?
Congratulations but given your sizeable investments. I think you should be worried about enjoying the fruits of your labour rather than minimize your tax.
If you need to reach out, email us at jacky.teaches.finance@gmail.com and also join our private FB group, we post intro session signup there
@@lvjuventus you are right, enjoy every moment when you can or you will regret it. With that amount you better retire early right now, first to enjoy, second reduction tax implications
@@lvjuventus Why are you of the mindset that these things are mutually exclusive? Do you think it's impossible for him to enjoy his retirement and also reduce the taxes he is paying?
Pls reach out to a licensed financial advisor who offers a fee for advice model. They will have a fiduciary duty, and you can look up their credentials and professional history. This will offer you much more protection than taking advice from a random stranger on the internet.
I will pay the tax now when I withdraw from RRSP and throw it in tfsa
No rsp is gonna pay 7% a year for 20 years!
Also, if u borrow money to invest, not only do u pay interest on the loan, you also pay tax on income earned
Great video !
I doubt the average person pays one-third of their income in taxes. That is more likely the pit top marginal rate.
Did I miss it, or did you just not include the tax payable (capital gains) when you pay off your loan's principal? If you need to pay off a $200k loan, then you'll likely have to sell somewhere around $250k to cover the tax due on your gains. That will significantly skew the remaining amount in your non-reg fund. Not saying it doesn't work out to your benefit in the end... but this is a significant missing value that diminishes the overall return.
i think he just demonstrated paying off the interest on the secured LOC (not the actual LOC principal)... as long as you pay off the interest most lenders won't really mess with you as long as your credit and credit ratios remain strong...., he also didn't show any yearly T5 income (which would also probably occur)
@@sholbech22 I completely agree... and think that this is overlooking a very substantial tax burden.
You dont need to sell it all in real life though, you can deleverage over 3-5 years. Also even if you sell all the tax burden is less than paying the income and getting less OAS in some cases. This is not a strategy for everyone as i have mentioned
When you take the $7000 out, don't you also get it with the withholding taxes? So doesn't Bob need to take out more than $7000 to cover his interest?
Yep you do, you get it back at tax filing
@@JackyKuk So then Bob is putting up the $700 (10%) until his taxes come back. Correct? Great video. Thanks Jacky.
@@JackyKuk Why wouldn't you convert part of your RRSP to a RRIF to avoid withholding taxes versus taking a lump sum? You would then have to continue to take the minimum amount every year from the RRIF however you could set up multiple accounts to do this to effectively collapse your RRSP
@@drizzt1970cabecause it goes by the total amount you take out across all reg accounts. You also cannot partially convert one account. Remember you do have to account for everything you do each year.
SO YOU CAN WRITE OFF YOUR INTEREST WHICH EQUALIZES OUT YOUR RRSP INCOME .
Maybe don't promote a 2% savings account as if it's a good option, which it isn't. I get the need for sponsorship, but perhaps only push worthwhile choices
i dont understand why is there borrowing? 200k borrowing this math is good for the rich not the average Bob.
How about the investment income earned on the $200k? This income will offset your meltdown strategy. For example 4% dividend on the $200k
Dividend is more tax efficient than income
@@JackyKuk Except the dividend is grossed up and if you are drawing OAS, you just lost all of it instead of some or none. Your million bucks in your investment income could be generating $40,000 of dividend, which grossed up is closer to $55,000. Add that to your income and you just gave back all of your OAS. Your strategy ignores the income from the investment account - which is a requirement of the investment to write off the interest. You cannot invest just in capital gains. And dividends are not more efficient than income after a certain level. It depends on the amount of dividend income and your tax rate. Your answer is too simple and is going to lead someone to make a major error based on your simple math.
@@paulnieuwland3460hopefully when a person goes to their advisor, that person will scrutinize very carefully….
Jacky, for a young investor with a projected income of less than 80K at retirement, would you recommend to invest heavy on a TFSA instead of an RSP account?
Depends on your current income, $50-60k probably rrsp is good
@@JackyKuk 100k
@@jp8479 At $100K then RRSP. You'll save 40% at your marginal tax rate, but in retirement, probably drop to 33% and have options for income splitting if you are married when you retire. The TFSA will also limit what you invest in, as the tax treaty with the USA, for example, covers retirement funds but not your TFSA. Invest in Apple, and get a dividend in your TFSA and you will see a US withholding tax. That won't happen in your RRSP.
I am watching your video on youtube and I can't have access to join your group. Can you contact me ? I am planning to retire and after watchung your video, I am excited to learn more and plan better.
You can email us at jacky.teaches.finance@gmail.com
When so are saying "RRSP withdrawals" are you referring to the RRIF, because I didn't hear to mention the withholding tax that is associated with RSP withdrawals.
withholding tax will get returned back to you in april tax filing if your final tax is not as high as the withheld amount
Your introduction is incorrect. The three things you mention are not what Canada is most know for. You may have been thinking of the Nordic countries, and Hong Kong, in the case of expensive real estate. Here are some of things Canada is most know for: Hockey, Maple syrup, Tim Hortons, Poutine, Niagara Falls, Indigenous culture, Multiculturalism, National parks, etc.
haha true
Good if the government continues to bailout the financial system
Scratch the, "great healthcare."
Is anyone interested in playing with high leverage in older years?
Leverage cuts both ways, especially when the market goes down. Bob is going to die of heart attack prematurely.
It might work out for his family if he has a big life insurance. Nuts.
CORRECTION !!!!! The RRSP does not not turn into a RRIF automatically at age 71.
An RRSP must be converted to a RRIF or annuity, or paid out in a lump sum by the end of the calendar year in which you turn age 71.
If you don't transfer your RRSP to another registered plan, like an annuity or registered retirement income fund (RRIF) before then, the CRA will treat your entire RRSP savings as income in that year. The tax hit could be substantial. ...
Correction!!! This absolutely depends on where your RRSP is held. Banks WILL absolutely convert your RSP to a RIF setting withdrawals at minimum cra reg amounts per age by Dec 31st of the year you turn 71 IF you have not done it yourself. This occurs automatically.
I liked your idea very However, I prefer a hybrid approach between drawing down just the interest and everything. For people without private pensions, I am planning around the $2000 pension credit you can get if you convert your RSP to a RRIF by age 65. Assuming we all hope to live to at least 85, God willing, that's $40000 spread out over 20 years. So maybe keep $30-35000 in your RRSP/RSPs by doing a partial. conversion. That's my plan for now. What do you think?
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Great health care? You have never used our system I must assume.
I did, few times, its great!
@@JackyKuk it's garbage pal and I've always lived here.
@@secordman sorry to hear that
Your not saving anything on taxes, the 7k in interest payment could have been written off against his current 100k passive or active income, there would only be a tax advantage to this if his only income was coming from the rrsp melt and nothing else
Yeah, he ignores you can't borrow and invest in something that only produces a capital gain and write off the interest.
@@mik272727 Exactly. To write off that interest you need income. If his strategy generates dividend income, that gets grossed up BEFORE the OAS clawback is calculated. He also states OAS claw back is calculated on net income - it isn't. It is on gross. So when you gross up your dividend income on this investment income, you are about to lose your OAS - and all the benefits of this strategy
@@paulnieuwland3460 The amount of interest deducted can be more than the amount of investment income. You're overthinking this. Cheers
@@paulnieuwland3460 The amount of inter est deducted can be more than the amount of inve stment income. You're overthinking this. Cheers
@@paulnieuwland3460 You're overthinking this
Just a comment on the intro about Canada taxation. We are mid-pack compared to OECD countries for taxes vs GDP and 8th overall in income taxes specifically. We are much lower in terms of consumption taxes. Most Canadians will only use the US for comparison which I don’t think is valid considering the difference in the way government revenue is spent. For retired people of modest means, the taxation scheme in Canada is very reasonable. Favourable taxes on primary residences and no inheritance tax should also be included in the discussion.
It’s also important to point out that claiming interest for investments can be tricky. Also, CRA is expecting the investment to provide on going returns such as dividends or capital gains. It gets complicated with buy and hold investments. Luckily regular ETFs are fine for this strategy.
Imagine that: when comparing to the highest tax countries in the world, it doesn't look so bad. There's more to the world than OECD countries.
Makes sense but unfortunately only saves $2/3k yrs in tax . Easier to Rrif earlier (55) split with your wife or just make less money.(not to mention the risk and work)
It’s going too fast !!