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  Canada Immigration Forum > About Canada > Financial Planning > Buy RRSP or not
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Buy RRSP or not




Me and my wife are eligible to buy RRSP worth $2,00,000 and if I have the money what are the safest options available in Canada.

I do see safe deposits offered by Indian nationalized banks for senior citizens offering a 9 - 10%.Is there any RRSP investment channel that can can give me the same options in Canada?

Also what is tax bracket if we sell property in Canada and net a margin of $2,25,000.

Thanks,
Jack109


 
Jack109

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Member since: Jul 04
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Post ID: 181047 26-03-11 18:26:08
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pratickm
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Member since: Feb 04




Posts: 2824
Location: Toronto


Quote:
Originally posted by Jack109
Me and my wife are eligible to buy RRSP worth $2,00,000 and if I have the money what are the safest options available in Canada.

The safest is a GIC.
However, GICs are CDIC insured only up to a limit of $100,000 per institution.
Therefore, you will have to split your investment across 2 or 3 institutions.
If you are indeed investing nearly $100,000 per bank, you should be able to get higher than market interest rates for your investment.
GIC is about as safe as you can get.
Therefore, your rate of return will be lower than other forms of investments.
Quote:

I do see safe deposits offered by Indian nationalized banks for senior citizens offering a 9 - 10%.Is there any RRSP investment channel that can can give me the same options in Canada?

Short answer : No.
There are certain discounts for seniors but nowhere near 9 - 10%.
You can get 9 - 10% returns but not in safe GICs even with senior discount rates.
To get 10% annual returns you will need to invest in stocks, high yield bonds, etc.
Quote:
Also what is tax bracket if we sell property in Canada and net a margin of $2,25,000.
If this property is designated as your primary home, then there are no taxes to be paid.
If this is an investment property, you will need to pay capital gains taxes.
The tax rate will depend on your province.
Check out the tax tables at:
http://www.taxtips.ca/taxrates/on.htm

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Post ID: 181048 26-03-11 18:47:19
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ashedfc
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Member since: Jun 10




Posts: 2153
Location: GTA


Quote:
Originally posted by Jack109
Me and my wife are eligible to buy RRSP worth $2,00,000 and if I have the money what are the safest options available in Canada.

I do see safe deposits offered by Indian nationalized banks for senior citizens offering a 9 - 10%.Is there any RRSP investment channel that can can give me the same options in Canada?

Also what is tax bracket if we sell property in Canada and net a margin of $2,25,000.

Thanks,
Jack109


Just because you have RRSP contribution doesn't mean you have to contribute - I mean you have to evaluate the pros & cons of putting the money in an RRSP (as it just defers the tax to a later date).

There is a reason why, Indian Nationalized Banks offer higher interest rate: its the inflation & devaluation of Rupees over time. You have to see weather the loss of purchasing power of Rupees is offset by the higher interest you receive or not..

Canadian taxation reviews interest income as 100% taxable, so in some cases getting less might work out more if you follow the dividend & capital gain route.

Property proceeds can be 100% tax free (if the house you are selling can be classified as principle residence). You might be better off making this choice. If you own more than one home at that time, than you can classify anyone as principle residence (You don't have to live there), & other one becomes investment residence.

Sometimes getting a lower return might be beneficial (atleast you preserve the value). Like Gold gives 0% interest, but it has gained the most in any currency in the last 10yrs & is expected to do so in the future...




 
Last edited by: ashedfc on 28-03-11 15:07:58
Post ID: 181124 28-03-11 14:52:54
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chekram_04
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Member since: Nov 06




Posts: 427
Location: Mississauga


There are some drawbacks with the RRSP as at the old age you may not be eligible for OAS given to lower income citizens. The other thing is that it is a tax deferred as told in earlier post.
Better if you invest it in somewhere like property, stocks or you can start your own business which can generate return on it. With this much of money you can buy franchisee of any business. You can generate reasonable amount of profit when you sell it.


 
Post ID: 181139 28-03-11 22:13:48
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