Money is one of the most important things in our lives, yet everyone seems reluctant to talk about it! But if you don’t have an investment plan in place, it may be hard to reach your life goals – such as becoming a homeowner, saving for your children’s education, or making sure you can afford your dream retirement.
And even if you have tried to get started, you may have been overwhelmed by all the different investment choices available! To help you get started, we’ve summarized common investment options:
A pension plan is employer-sponsored to help you with a retirement income. There are two types of pension plans. Defined contribution pension plans have a set contribution amount but not a guaranteed payout amount, and defined benefit plans have a guaranteed annual payout amount. Contributions to either type of plan are tax-deductible.
Locked-In Retirement Account (LIRA)
If you have a job with a pension plan and you leave it, you can choose to put that money into a locked-in retirement account (LIRA). You can’t access the money until you retire, and you won’t be taxed on any gains until you convert it into a life income fund (LIF) and start making withdrawals.
Registered Retirement Savings Plan (RRSP)
A registered retirement savings (RRSP) is a registered investment with a maximum limit you can contribute each year. Your contributions are tax-deductible, helping cut down your tax bill, and you aren’t taxed on any gains until you convert it into a registered retirement income fund (RRIF) and start making withdrawals.
An annuity is a fixed stream of income you can access during your retirement years. You can purchase an annuity using a lump sum of money. Annuities can give you peace of mind that you have a steady income to rely on, but it’s essential to be clear on how they work before you buy one.
Tax Free Savings Account (TFSA)
A tax-free savings account (TFSA) is one of the best ways to save for future goals – whether that’s a down payment for a house, a dream vacation, or additional income in retirement. You aren’t taxed on your gains, nor are you taxed when you make any withdrawals. There is an annual limit to how much you can contribute.
Registered Education Savings Plan (RESP)
A registered education savings plan (RESP) is a great way to save for your child’s education. The government will match what you contribute to a maximum of $500 each year, and you may be able to get the Canada Learning Bond even if you don’t make any contributions.
A Non-Registered Investment
A non-registered investment is either a savings or an investment account in which you must pay taxes on your gains and withdrawals.
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Feeling a bit overwhelmed? We’re here to help you plan for your future, so you can save for tomorrow while minimizing the amount of taxes you have to pay on your gains! Give us a call or contact us online to get started.