RRSP vs Non Registered Investing

[@underscr0e]

I like your detailed realistic investment scenarios, thx.

[@K4Financial]

You’re very welcome

[@name751]

Proper usage of the RSP refund is key. Great caution!

[@K4Financial]

Yeah, it’s the difference maker.

[@RobTetrault]

Totally agree with you!!

[@thanks4that261]

Even if the person spent that refund on a holiday or enjoying life. I'd take the enjoyment of my life over the small difference in annual retirement income. So either way, the RSP is better than unregistered, unless you're in the lowest tax bracket... then maybe not.

[@d3m0n876]

non registered accounts are used when rrsp and tfsa is maxed

[@K4Financial]

Good as a general rule for sure. Sometimes RRSPs can be too big.

[@d3m0n876]

@@K4Financial that would be a cool video to show when an rrsp is too big but not maxed and the TFSA is maxed so the non reg is used, very interesting scenario hopefully some of us have the privilege of be in one day

[@K4Financial]

@@d3m0n876 I’ll see if I can touch on it in a video I’m planning about what % of your income you have to save at different ages to have a retirement that produces exactly the same lifestyle you have when you’re working. If you’re young, you definitely don’t need to save 18%, which is the RRSP room generated. Especially now that the TFSA is in play. Somewhere back in the catalog I did a video called. “Do you need to max out your RRSP.” I think that’s the name. I also think I touched on about how much you’d need to save.

[@medwayhistory3101]

I recently maxed my tfsa and rsp for the first time at age 49. I’m working on a non-reg while waiting for more contribution in the registered accounts. It’s clear the tfsa room is available every January 1. My question is does the rrsp contribution room begin each January 1 as well, or is it after March 31, or is it after filing taxes? It is tough to find the information but I’m curious and don’t want to over contribute or trigger consequences. Thanks for the great videos!

[@kitty4tify]

Thank you Kent. Great video on rrsp.

[@K4Financial]

You’re welcome

[@georgeemil3618]

Any relation to the Property Brothers? But seriously, I recently learned about the Buy, Borrow, Die strategy of the superrich of the US. Will that work for Canadians? If a Canadian contributes minimally to his RRSP and invests in a non-registered account, never selling, by the time of retirement, his RRIF income can keep him in the lowest tax bracket while he borrows (using his taxable investments as collateral), thus living on a good middle income lifestyle but being taxed really low using his RRIF income to pay for the interest on the loan. The DIE part of the strategy may be tricky passing all your stock holdings and debt to the next generation.

[@K4Financial]

Just saw this. No relation unfortunately. I don’t think it works here as the lending practices and tax deductions here are different, but I could be mistaken.

[@terryevp4084]

Awesome information & thanks very much...!!!

[@K4Financial]

You’re very welcome. Thanks for the support

[@tracycarig6565]

My husband stopped contributing to his RRSP 5 yrs ago but still contributing to his NREG. We discovered that his company matches his contribution to NREG. Is it helpful for him to recontribute to his RRSP (which also getting matched) or better to stay in NREG? We still get refunds even though he stopped contributing to his RRSP.

[@K4Financial]

I wouldn’t be able to say without more specifics.

[@tracycarig6565]

@@K4Financial his marginal tax rate is 30.5%

[@thanks4that261]

Great video, thanks!!

[@K4Financial]

You’re welcome. Thanks for watching

[@mrslcom]

If I’m investing in equities that generate little to no ongoing income, why should I put it into a RRSP? Just like a RRSP, there will be almost no taxes to be paid every year from my non-registered account. By the time I retire, I can withdraw all my past yearly contributions from my non-registered account tax free. The only tax I have to pay then is the capital gains tax which is based only on 50% of the gains. Not only that, I don’t have to worry about having money left in a RRSP if I do die early and have the whole thing taxed as one lump-sum income. I think it’s far better to just invest in a non-registered account and avoid the RRSP altogether.

[@K4Financial]

Do you ever trade the equities?

[@mrslcom]

@@K4Financial No, just buy and hold ETFs with very minor rebalancing. Any capital gains tax I have to pay as a result will eventually transpire to less capital gains tax I have to pay in the future when I retire. Hope that makes sense.

[@K4Financial]

@@mrslcom it does, but they still trade internally, so gains are triggered all the time and they’ll also invest in dividend paying companies which will have tax implications. Your tax may be lower than what I have suggested, but there’s still tax. In that case, with the proper use of the RRSP, you’d be better off. One case I’ve seen where it 100% wouldn’t be better is a client who bought Apple in 1996 and never sold. Having that kind of cash in an RRSP would be bad. At some point, there comes a limit to how much one should have in their RRSP and that depends on a lot of factors.

[@mrslcom]

@@K4Financial Thanks for your insights. One other factor I forgot to mention is that I will most likely be in the similar tax bracket pre and post retirement. That also influence my thinking that I’m better off in a non-registered account than a RRSP.

[@K4Financial]

@@mrslcom that definitely comes into play and can push it in favour of the non-reg. As I suggested in the video, there are exceptions, but in most cases, the RRSP will win.

[@Kgcottawa]

Great video. Thanks. 😊

[@regmanzer7336]

Every time I watch these kind of comparisons there seems to be missing information that might completely change the outcome. What I have noticed is that most people don't have an extra $10k kicking around to invest in their RRSP or non-Registered account every year, hence the reason why we see all RRSP loan promotions every year around tax season. So if you make the assumption that the person has to borrow the $10k every year and the income tax they get back from contributing to their RRSP is used to pay down their RRSP loan, plus they then make the additional payments to the loan and have it paid off by the end of the year just in time to start the cycle all over again for the next year. That would be more realistic in my opinion. Now if you also assume the person has to borrow for the non-registered account, then they would have to buy dividend paying stocks to make the payments on the borrowed money, however they also get a tax benefit at tax time because they borrowed the money to invest in a non-registered account. If you run the same scenario again, who knows what the outcome would be, I think you'd have quite a competition. Then there is another scenario that throws a curve ball into this, that is what happens in these cases if your retirement income is not less than your working years income? I have seen several people talking about this, wishing someone had warned them that this was a real possibility. I would be interested to see what happens with the above scenarios.

[@cisco4766]

Had to watch this at 1.25 speed

[@rosebush7000]

Like damn! 🤣🤣🤣 I hear you!

[@rosebush7000]

I went for 1.5 speed 🤣🤣🤣I could not take it.

[@funtimes7671]

Great video once again…..it is a relief that there some like you who are actually educating Canadians. If you want to have a good laugh, and a disgusting site of stupid, go see “Behind the Vault” on KZbin and see his CPP videos. He claims to be a Canadian Financial Advisor but in reality he’s a used car salesman. Also, “behind the vault” is a horrible name as there just dust back there, he probably was too mindless to realize the money is in the vault, not behind it.

[@ryanthaeditor]

Lol yeah that’s true re: the name hahaha

[@RobTetrault]

Great Video!!

[@K4Financial]

Thanks Rob

[@Ian-of9oi]

So my Daughter got her first job yesterday and after a year they do RRSP matching. She makes $14 an hour. I’m thinking max TFSA first. Is there any point for a person making minimum wage to buy RRSPs? Even if they will match half? Thanks.

[@K4Financial]

Never turn down free money

[@Ian-of9oi]

@@K4Financial thanks for the quick reply. We will see where we are sitting in a year. See if she still works there.

[@DavincisGirl66]

@@Ian-of9oi I think you can deposit the money in the rrsp this year and let it grow and defer using it as a tax deduction for another year.

[@claireviolet811]

I FOUND WALDO!