RRSP vs Non-Reg - Are RRSPs WORTH IT?

[@angelabalisi1516]

I am learning a LOT from you. Thank you! Keep up the good work !

[@TheIndependentDollar]

Thanks Angela, I am happy to hear that! I appreciate the comment and thanks for stopping in and checking out the channel 🙂

[@Hyperpandas]

If I'm not mistaken, you missed a pretty big consideration: capital gains taxes. While your RRSP scenario achieves the retirement goal two years earlier, the non-registered scenario could have a lower tax burden because RRIF (RRSP) income is always taxed as income (full rate) but only half of the gains on the non-registered account will be taxed as income (and no tax on the principle, of course). Considering the difference was (surprisingly) only two years difference, the non-registered portfolio might be more valuable due to the lower tax burden.

[@TheIndependentDollar]

Hi Hyperpandas, thanks for watching the video and checking out the channel 👍 We assumed capital gains as party of their investment portfolio, however, the tax deduction and deferral of tax more than offset the advantages of ignoring the RRSP all together. We tried to show that a balance between the accounts and developing a strategy during work and also once you retire, can save you a lot of money, and maybe even retire a few years earlier too. The RRSP isn't always right for everyone, but in this case it worked.

[@tanyaiv8389]

Keep making videos please!!! Your channel is great!

[@jamespalmer421]

Great video! I’m not sure why there’s all the hate around RRSPs lately. I think a lot of people don’t understand them. Another advantage of RRSPs is you can hold US stocks and ETFs in an RRSP and avoid paying foreign withholding tax. It’s the only kind of account that lets you do this, making it even more tax free than a TFSA.

[@TheIndependentDollar]

Hi James Palmer, there are definitely some pros and cons to RRSPs and they have received a lot of hate recently. I think the best course of action is to always make the decision based on one's personal financial situation. It can be hard to tell what option is best without running the numbers first.

[@bobesfanchi]

I thought in the case of TFSAs the withholding tax only applies to the dividends. No?

[@jamespalmer421]

@@bobesfanchi That's true, and so it's a small percentage, but when your retirement money is into the hundreds of thousands or over a million dollars, even those small percentages add up to thousands of dollars.

[@fahimaziz7593]

Good one as usual. Keep it up! :) I personally think RRSP is the most toxic financial vehicle there is next to mutual funds with high management fees. ^_^ RRSP will be the last account I put my money into! Even if it takes years more to retire.. But thanks for the great info you brings to us. Appreciate!

[@TheIndependentDollar]

Eventually the days of high MERs will eventually be gone...The financial world has changed so much, there are some really great options out there with very low fees now thankfully. RRSPs are definitely not for everyone but for some people, if used properly, they can mean paying less tax over your lifetime which we think is a win 👍

[@davidsdinero]

Great content. Keep it going!

[@TheIndependentDollar]

Thanks Professor Finance!

[@davidmcquaid2557]

17 years to reach the 1.5 amount, but you didn't say how much they are putting in, and when. Can you explain.

[@Sakurabyshajia]

how to open a non registered account and how to do it taxes this is all so confusing please do a videe on that how do you guys do capital gains - capital loses etc on this?

[@pokiblue5870]

AS someone who has maxed TFSA and RRSP thanks alot for this video! Im maxing RRSP and i dont even know if its the right choice lol ...i just have too much money and dunno what to do with it. I think ill just buy a triplex at this point lol i earn around 6000-7000$ after tax a month ... * plz keep making videos you are very helpful

[@TheIndependentDollar]

Hi Pokiblue, Real estate can be a great way to diversify your investments. I would suggest finding a good accountant to work with if you're going to be going into rental income. We are going to be releasing some small business tax videos and rental income videos in the coming months to get you started but with rental properties, a great Accountant will be a huge asset. Thanks for watching the video, we're happy you liked it!

[@wds3222]

I mean there is no such of thing too much money.

[@billb5379]

if you dont know what to do with it, PM me, ill give you my paypal account, feel free to deposit it there :P

[@ziyuewu6406]

As your suggestion, if I don't contribute money in RRSP instead of Non-registered account, I have to pay more income tax in each single year. In turn, I will have less money to invest in any type of accounts. If you say the investment income can be less taxable from non-registered account, would it be likely that the income tax I can save if I contribute more in RRSP is almost the same as that I can save in the taxable amount of investment dividend if I instead invest more money in non-registered account? Honestly, the reason I put more money in RRSP is just to reduce income tax that I have to pay in each year. I don't have more idea about how to make the investment wisely. If so, should I still put more in RRSP to save income tax in the future? I hope I can get your more detailed suggestion. Thanks in advance.

[@ajfras3r]

What types of investments (ie. high growth, high dividend etc) are best invested in a RRSP vs TFSA vs non-registered?

[@TheIndependentDollar]

Hi Alex, usually your low earning / interest paying investments are best for the RRSP since you won't receive any favourable tax treatment. If your TFSA is already maxed out, then your higher risk / capital gain investments are usually a good fit for non-registered accounts since capital gains are taxed the most favourably. That being said, you can earn a fair amount in dividends, tax free, with all of the credits we get. So if your only source of income is your investment accounts, then you might want to put your dividend paying stocks in a non-registered account and put your higher risk investments in your TFSA. If you get a chance, check out our RRSP vs TFSA video: kzbin.info/www/bejne/fWOUfYpoiqhneNU, Avoiding RRSP video: kzbin.info/www/bejne/eKKmaWh_Yshoe7c and our Canadian Tax overview video: kzbin.info/www/bejne/oqi9h5uegLJ1m68 - we give you some examples of when it makes sense to use all 3 accounts and how taxation can work in your favour or against you depending on what you buy. Hope that helps, thanks for the great question and checking out our channel.

[@ajfras3r]

@@TheIndependentDollar wow thank you for such a great response! TFSA is maxed at the moment so just evaluating where to allocate new investments the most efficiently tax wise. I had always thought it'd be better to invest within an RRSP before unregistered but your videos make a ton of sense !

[@fuzion5392]

Can you do one on FHSA

[@ramican9155]

Can a person contribute to RRSP from Non registered by using in kind method, and would it count??

[@TheIndependentDollar]

Hi rami, even if you make the contribution in-kind it would still use up your RRSP contribution room. If you have a chance, check out my non-reg to RRSP video, I think you would find it helpful as doing this has some downfalls: kzbin.info/www/bejne/qoKVg4KErtZgeJI

[@NoviceExpert]

Why give an example of a very unlikely situation that doesn't apply to the vast majority of people?

[@stevebrock8056]

TFSA is maxed out, what about RRSP vs putting more towards mortgage? Great video's, just found your channel. Keep up the good work.

[@TheIndependentDollar]

Hi Steve, good idea - I can do another video about paying down debt vs investing, especially when it comes to RRSPs and the tax deductions. Thanks for the comment and checking out the channel 👍

[@lastempire7302]

The only thing is, this hypothetical subscriber will be missing out the the the most powerful tax shelter for individual Canadian - Principal Residence Exemption if her only goal for retirement is to sit on the 1.5M in a non-reg account.

[@JohnSmith-oj3fh]

I'm in my late 40s. Is it worth maxing out a TFSA or putting it all into a Non-Reg?

[@TheIndependentDollar]

Hi John, an Accountant or Financial Advisor will have access to software to run models to see which options bests suits you based on your financial details and goals. That being said, being that you're using after tax dollars for both accounts, the TFSA is tax-free which is a bonus compared to the non-reg account. There are some restrictions on what you can buy within the account though and guidelines to follow to ensure it remains tax-free. Depending on your situation, the RRSP may be suitable as well. While it is taxable when you withdraw, it does offer some excellent benefits while the money grows, and there are strategies to minimize taxes when you eventually withdraw it. Thanks for the comment and checking out the channel.

[@compendiousperspicacity]

Good video but this information is helping you to play "the game" inside of "The Matrix" ...Think outside the box: the money described here to "invest" would be better spent on specialized financial education and starting a service based business that can scale.

[@rashmindersinghsohi1875]

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