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moneysense.ca, 27/11/06
This and That
- According to Statistics Canada, 6.1 million taxpayers contributed an average of $5,016 to a RRSP in 2005. The median contribution was $2,630. Despite cheery headlines (“RRSP Contributions reach all-time high”), taxpayers used up a mere 7% of available contribution room.
- Statistics Canada also reported that 7.8 million taxpayers reported an average of $4,423 in investment income (interest and dividends from taxable accounts). The median amount was $460.
- Statistics Canada also released information on charitable donations: 5.8 million taxpayers donated an average of $1,362. The median donation was $240.
- Are you looking for extra yield in the wake of the income trust debacle? You may want to check out Rob Carrick’s column on six income plays (I am not so sure that they are a good alternative to bonds and GICs though).
- ICICI Bank Canada does not offer the best high-interest savings account anymore (even for US dollars). Also, as this Toronto Star story points out there are customer service problems at the bank.
moneysense.ca, 27/11/06
The skew to the left on those Stats Can numbers is pretty big. I guess there are a few very big donations, RRSP contributions and people with investment income and a lot of people with low amounts in those areas.
Is this to RRSP only or also RPP?? what is the average contribution room of people for RRSP (lots have employer pensions that only give them 2-3K room..
My generation’s time shall come
Out of all the people my age I know, none of us have employer benefit plans, and we are all pouring everything we can on our mortgages. When those are done, we’re going to start plowing it into the RRSP’s like crazy.
Yes, we might be a little further ahead doing both, but being debt free is a huge emotional boost… as my buddy that just paid off a while ago says, “it’s amazing. I had to watch Quicken carefully because of our odd pay dates to make sure nothing went wrong. Now if I get busy and don’t check for a few weeks my only reaction is “wow, I can’t believe I have this much money”
Amen to that, Steve! I will have my mortgage paid off early next year and I hope to be completely debt free by the end of next year!
Steve: I agree with the fact that it’s emotionnaly good to be debt free … my 2 cents would be though that not contributing to a RRSP early has the consequence that you have much less money compounding when it matters the most. That said, I’ll be really happy when I’m mortgage free, but I’ll keep maxing out my RRSP until then
That’s true, but when I worked out the numbers, it really wasn’t that big a difference in my case, although that could be because I went very conservative on the returns my RRSP’s would acheive, so the compounded tax-free gains were offset by compounded after-tax mortgage fees and higher tax savings from waiting (I keep moving up in salary meaning more savings in the higher brackets), plus I took the present value of the taxes to be paid due to the forced withdrawals of the RRIF’s into account. If I had used an 8% rate of return rather than 6%, the difference would have magnified significantly.
That said, mortgage + RRSP is great too, that’s the route everyone I work with that is a generation before me is going (the people in their 40’s/50’s) and they’re all doing pretty good, so I’m definately not knocking it. I’d happily endorse that plan as well
The only thing I say to my friends is to figure out when they want to retire, how much they’ll need, and make their own roadmap on how they want to get there… just make sure they get started while they have enough time that they can make it even with some bumps in the road.
Canadian RRSP Statistics…
The Canadian Capitalist linked to a Stats Canada article about Canadians and their RRSP contributions. I found some of the results interesting:
“As in recent years, almost 86% of taxfilers were eligible to contribute for the 2005 tax year. Of the…
Thank you for the clarification.
I was not aware of how your approach worked when you were picking book winners.