What is the tax rate when I withdraw some of my RRSP money? I know there is an amount taken off right away but what is the rate payable at tax time?

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I have 4 separate rrsp gic's that i think would be better off paying debt than sitting and collecting little interest, but i'm not sure how high the cost would be and if it's worth it. anybody have any knowledge on this as it would be greatly appreciated.

One the GICs mature, you can cash them without penalty. Just make sure the bank doesn't automatically renew them (you can check with them now to ensure there aren't any instructions on file). There will be tax payable from redeeming the RRSP, but the amount will depend on your other income.

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Any suggestions for good return on savings. though we do not have an extravagant lifestyle, we would like to be at least able to travel once a year when we retire. i have read some people's entries from people who think 1 million in savings, is not enough for them to retire on, if that's the case, we are cooked. this can't be possible--it can't cost that much--can it?

Good returns means increased volatility in the investment(s) selected. You need to determine how much your annual income you want in your retirement years, then work backwards to determine how much you need to invest at the given interest rate assumption to give you that at retirement. So the first thing you need to do is determine your minimum acceptable rate of return (MAR) on your investments, then you have to select specific investments that fit your MAR. Your Financial Advisor can help, or get a financial calculator to determine how much you need to invest and at the selected interest rate so you can achieve your goal.

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My in-laws just cashed in an rrsp, and they only got 65% of what was in it, and the rest is owed to the government. why do people get rrsps? wouldn't they be far better off to put that money in a savings account? so confused. thanks =) ash- what is a cd? exactduk- i don't understand. they paid money on those taxes when they earned it through their employer. they then took a part of their saving account every year and put it into an rrsp. they are being taxed double it seems, ash- thanks for the clarification. =)

They would've been better off putting it in a CD. A CD is a certificate of Deposit A certificate of Deposit (CD) is a time deposit, a financial product commonly offered to consumers in the United States by banks, thrift institutions, and credit unions. CDs are similar to savings accounts in that they are insured and thus virtually risk-free; they are "money in the bank" (CDs are insured by the Federal Deposit Insurance Corporation (FDIC) for banks or by the National Credit Union Administration (NCUA) for credit unions). They are different from savings accounts in that the CD has a specific, fixed term (often three months, six months, or one to five years), and, usually, a fixed interest rate. It is intended that the CD be held until maturity, at which time the money may be withdrawn together with the accrued interest. In exchange for keeping the money on deposit for the agreed-on term, institutions usually grant higher interest rates than they do on accounts from which money may be withdrawn on demand, although this may not be the case in an inverted yield curve situation. Fixed rates are common, but some institutions offer CDs with various forms of variable rates. For example, in mid-2004, interest rates were expected to rise, many banks and credit unions began to offer CDs with a "bump-up" feature. These allow for a single readjustment of the interest rate, at a time of the consumer's choosing, during the term of the CD. Sometimes, CDs that are indexed to the stock market, the bond market, or other indices are introduced. Basically, The bank takes your money for a period of time and gives you a higher interest rate than a savings account because of the short timeframe of the deposit.

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Hi , i came to canada 2 years ago and i am working in a mnc since last year . i want to buy house in mississauga or brampton area which will probably cost me 400 to 500 thousands . from my current job i draw close to 60000 annually and also i have around 40000 in cash . i checked some bank's websites and come to knwo that the maximum mortgage i can get is no more than 180-200 thousand(i am sure no good house can be bought with this money) . i am still single living alone and am saving most of my earnings and i can easily afford around 2000-2500 $ monthly mortgage. could anyone suggest me any legal ways like rrsp which can increase my maximum mortgage limit. also please let me knwo if rrsp can help me as i dont have it yet. thanks in advance

Well, if you have a steady job/decent income and low debt, you should just go into the bank that you do business with and talk to them about it..............they are eager for your business......don't just go by the websites..... there are many, many factors involved. ***Debt service ratio is the major one, credit score is also very important, as is steady current employment. Many, many people in Canada buy a home with only 5% down - this is a CMHC insured loan which is very low risk to the bank......your best bet is to make an appointment with a mortgage broker at your bank and see what they say about it! If you are their client they will try harder to get your business!!!!!!! Good luck! ☺

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Is this the time, between now and say summer, for the average investor to borrow money to purchase buy and hold stocks? a basket of normally expensive blue chip type stocks that have high dividend yields and are thought to be value priced in this current market?. these stocks are expensive to buy for investors like me who invest using a portion of our paycheque. we are forced to purchase index funds/mutual funds until our wealth is high enough that we can justify paying brokerage and trading fees for etf's or individual stocks. perhaps now is a time to consider borrowing money to purchase long-term buy and hold dividend yielding stocks because the dividend yields and potential share price increase will erase the cost of the transaction fees. here are my thoughts: -yes dividends are not considered safe until they are paid but once paid for me they are taxed at 25% of my normal income tax rate (cash interest is taxed at the full rate for example).. -assuming (in canada) the interest owing on borrowed money used to fund equities purchases is tax deductable. -or else i can borrow money to contribute to a retirement tax shelter (rrsp) and instead of claiming interest as a tax deduction, i would get a automatic reduction of income taxes owing. in my case it'll be 34% of the amount i contribute to the retirement shelter. -as a personal creed i never borrow money unless i have an equal amount available to pay off that debt. now this may not be a course of action for myself but what about others? is leverage recommended for the little long term investor?

just so the returns are greater than the carrying costs of the loan. And if so will that continue to be the case.

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I have paid child support for 18 years. when i was unemployed, i continued to pay, even cashing out an rrsp and taking a loan to do so instead of filing a change of circumstances with the court. i wanted to do the "right thing" for my children, so i willingly incurred the debt. now, i am seriously in debt because of this as well as the continuing support that i pay. in addition, my ex and daughter decided that she would go to university this year (without consulting me as to where, whether she would live in residence, etc) and has sent me a bill for $8000/year (in addition to continuing to want the child support she receives even though my daughter will be living on campus and i only see her once or twice a year, she is pretty much estranged from me). my ex's income is $250k and mine is $120k. i' m at a point financially where i am terrified about losing my home and cannot afford to continue paying support at this rate, let alone school costs that i was not consulted about. pls. help

You need a local lawyer, but you seem to have a case. 1. Daughter is 18 2. Check the laws about paying for college, there *may* be some requirement. 3. The daughter is not living at home, and CS is usually based on where the child lives. This may be grounds to petition for a change. 4. If your income or her income has changed since CS was set, that is another legitimate reason to petition for a change. Make sure you organize your documentation to show your history of faithful payments.