Comments on: This and That http://www.canadiancapitalist.com/this-and-that-34/ Helping you invest and prosper Sat, 11 Feb 2012 12:40:17 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Mike L http://www.canadiancapitalist.com/this-and-that-34/#comment-21126 Mike L Mon, 19 Feb 2007 22:43:43 +0000 http://www.canadiancapitalist.com/2007/02/08/this-and-that-34#comment-21126 Re:"Tax expert Tim Cestnick wades into the RRSP vs. mortgage debate" Here's a really good calculator I found - http://www.insurecan.com/mod.php?mod=mortgageRRSP - that compares three scenarios: 1) investing 100% in RRSP (including re-investing tax refund in RRSP), 2) 100% prepay mortgage (and then invest in RRSP when mortgage paid off), 3) contributing to RRSP and using tax refund to pre-pay mortgage. It lets you put in personal information like marginal tax rate and expected rate of return, so that the results are personal to your situation. Here's a good site for figuring marginal tax rate: http://www.walterharder.ca/MarginalTaxRateCalculator.html I found for me that option 3 provided the best results (unless I expect more than 10% return on my RRSPs, which seems pushing it). Mike Re:”Tax expert Tim Cestnick wades into the RRSP vs. mortgage debate”

Here’s a really good calculator I found – http://www.insurecan.com/mod.php?mod=mortgageRRSP – that compares three scenarios:
1) investing 100% in RRSP (including re-investing tax refund in RRSP),
2) 100% prepay mortgage (and then invest in RRSP when mortgage paid off),
3) contributing to RRSP and using tax refund to pre-pay mortgage.
It lets you put in personal information like marginal tax rate and expected rate of return, so that the results are personal to your situation. Here’s a good site for figuring marginal tax rate: http://www.walterharder.ca/MarginalTaxRateCalculator.html

I found for me that option 3 provided the best results (unless I expect more than 10% return on my RRSPs, which seems pushing it).

Mike

]]> By: David http://www.canadiancapitalist.com/this-and-that-34/#comment-20035 David Sat, 10 Feb 2007 05:29:01 +0000 http://www.canadiancapitalist.com/2007/02/08/this-and-that-34#comment-20035 Re:"Tax expert Tim Cestnick wades into the RRSP vs. mortgage debate" I find it interesting that Mr. Cestnick carefully steps us through the math of his first examples, but not through the last. There is no mention of the approximately $57,000 in additional interest plus lost opportunity from the nearly 4 years of paying out the mortgage late rather than early. In addition, some tax gurus will also state that the money saved in mortgage interest has a higher value, as you never have to earn it. That is, the $65,024 that you save in interest costs is equal to earning $108,373 and paying the taxes on it to have the $65,024 to pay the interest. Finally the link he refers at empire.ca seems to assume that there is no tax penalty on withdrawl of the RSP, so it's value is artifically inflated. David Re:”Tax expert Tim Cestnick wades into the RRSP vs. mortgage debate”

I find it interesting that Mr. Cestnick carefully steps us through the math of his first examples, but not through the last. There is no mention of the approximately $57,000 in additional interest plus lost opportunity from the nearly 4 years of paying out the mortgage late rather than early. In addition, some tax gurus will also state that the money saved in mortgage interest has a higher value, as you never have to earn it. That is, the $65,024 that you save in interest costs is equal to earning $108,373 and paying the taxes on it to have the $65,024 to pay the interest.

Finally the link he refers at empire.ca seems to assume that there is no tax penalty on withdrawl of the RSP, so it’s value is artifically inflated.

David

]]> By: Phil S http://www.canadiancapitalist.com/this-and-that-34/#comment-19981 Phil S Fri, 09 Feb 2007 21:33:53 +0000 http://www.canadiancapitalist.com/2007/02/08/this-and-that-34#comment-19981 Another tax advantaged savings method is to incorporate your investment portfolio, which none of the items in your "this and that" mentioned. The disadvantage is that you have to open a corporation and file a corporate tax return every year, else pay someone else to do it. But the investment income doesn't get added to your earned income on your personal tax return and instead is taxed at the corporate rate. In a section of Tim Cestnick's book "tax freedom zone", he details the advantages and pitfalls of incorporating your investment portfolio. In my case, I had a dormant corporation sitting around anyways, so I just decided to use it as a holding company which holds all of my personal investments. Another tax advantaged savings method is to incorporate your investment portfolio, which none of the items in your “this and that” mentioned. The disadvantage is that you have to open a corporation and file a corporate tax return every year, else pay someone else to do it. But the investment income doesn’t get added to your earned income on your personal tax return and instead is taxed at the corporate rate.
In a section of Tim Cestnick’s book “tax freedom zone”, he details the advantages and pitfalls of incorporating your investment portfolio. In my case, I had a dormant corporation sitting around anyways, so I just decided to use it as a holding company which holds all of my personal investments.

]]> By: Canadian Capitalist http://www.canadiancapitalist.com/this-and-that-34/#comment-19962 Canadian Capitalist Fri, 09 Feb 2007 15:49:15 +0000 http://www.canadiancapitalist.com/2007/02/08/this-and-that-34#comment-19962 John: You're right. I should pay more attention to my synopsis of the article :) John: You’re right. I should pay more attention to my synopsis of the article :)

]]> By: hepman http://www.canadiancapitalist.com/this-and-that-34/#comment-19959 hepman Fri, 09 Feb 2007 15:08:27 +0000 http://www.canadiancapitalist.com/2007/02/08/this-and-that-34#comment-19959 John, I'm a new financial planner and I would suggest you find out how many clients your advisor has. I got into this business (second career)to help people and keep busy, not to get rich, so I plan to keep my client list below 100 people to make sure I have time to look after each individual properly. If an advisor has 200+ clients, how well can they take care of the "C" clients? The "A" clients porfolios will take up more time (tax issues, estate issues, trusts, charities etc). John, I’m a new financial planner and I would suggest you find out how many clients your advisor has. I got into this business (second career)to help people and keep busy, not to get rich, so I plan to keep my client list below 100 people to make sure I have time to look after each individual properly. If an advisor has 200+ clients, how well can they take care of the “C” clients? The “A” clients porfolios will take up more time (tax issues, estate issues, trusts, charities etc).

]]> By: John http://www.canadiancapitalist.com/this-and-that-34/#comment-19952 John Fri, 09 Feb 2007 12:39:17 +0000 http://www.canadiancapitalist.com/2007/02/08/this-and-that-34#comment-19952 Dear CC, Ellen's article promises advice on how to find a financial advisor, and to how to stay off the 'C' list. However, the article concentrates on the latter and ingores the former. (Damn !). Dear CC,

Ellen’s article promises advice on how to find a financial advisor, and to how to stay off the ‘C’ list. However, the article concentrates on the latter and ingores the former. (Damn !).

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