This SImple Investment Switch Could Save You Thousands in Taxes

[@BP-wg3rp]

I think its worth noting the obvious for some but may benefit others. Fixed income investment offer NO TAXATION DISCOUNTS and should ideally be held in your TFSA where they are subject to zero tax. When your TFSA is maxxed with Fixed Income, any other FI investments should be within your RSP/RIF to achieve your allocation goals. Also worth pointing out, equities in your non-registered account are only subject to tax on dividends and distributions year over year. Capital gains tax is only applied when you realize the gain (sell the stock). In a buy and hold year, you will only be subject tax on dividend yields at a typically discounted rate vs interest income. Thx for the video, Kent. I know you cant get into the weeds for the finer details on youtube but your example is just one more reason a planner can earn their fees tenfold.

[@pasingh804]

Kindly make a video for RESP withdrawal and any strategy required for that. That will be really beneficial for parents whose kids are on that age or going to be.

[@steveplays5408]

Could be this is not like thst for tsx efficiency but because they want some safe liquid easly accessible cash. If it's in the rrsp it's kinda locked up or harder to get to in a way

[@K4Financial]

Always depends on the personal situation and how you are doing your own withdrawals. It’s certainly fine to have some safe assets accessible, but to have it all in stuff that isn’t tax efficient seems like a mistake to me

[@DcArmy9015]

Just curious, what's on your right hand palm? Tattoo?

[@K4Financial]

It was a blister. I was building a fire pit in my back yard and I have weak hands these days.

[@BenoitStPierre]

You are not just changing where your holdings are held, you are also changing your overall asset allocation by doing this! Ben Felix dives deep on this topic: kzbin.info/www/bejne/Y5C8lIuMabionqs The inclusion rate change to 2/3 instead of 1/2 is also missing information in this video.

[@K4Financial]

I gave the most simple example I could to explain that it will reduce your taxes, which it will. That was the only point. Personal situations require much more than a basic example.

[@neolithic3]

The inclusion rate doesn't change until well over the amount given in this example so it's a moot point. It's going to affect almost nobody.

[@Roc_kLobster]

I'm still confused. Say I have $1M in GICs inside RRIF, plus $1M in GICs in a non-registered (NR) account, and plan to withdraw $50K + interest earned every year from each account. Assuming 5% interest, then I will get $100K from each account ($50K principle + $50K interest on $1M). However, from the RRIF, I will pay taxes on the full $100K withdraw. But from NR account, I only pay taxes on $50K interest. Assuming 30% overall taxes, I will pay $30K tax on RRIF withdraw and $15K taxes on NR withdraw. So, why is it advantageous to put GICs in registered account?

[@K4Financial]

It isn’t. I’ll add to this as an edit. I didn’t say anything about taxes on withdrawals, I was talking about taxes on earnings. If you only own GICs, it makes no difference.

[@liberatski]

You're couples example is not the typical average canadian. Who has 1M each nowadays?

[@K4Financial]

Don’t think I ever said anything about it being a typical example. I use numbers with 1’s and 0’s so that it’s easier for people to understand the concept and not get caught up in the math