According to a recent post by Garth Turner, the gift, only 4 in 10 Canadians have a TFSA (Tax Free Savings Account). Of those only half actually do anything with it. In addition 80% of people with a TFSA have it sitting in high interest savings accounts. Garth writes: “Despite being able to shelter all this money from any kind of tax, most don’t. Only four in ten people have a TFSA, even five years after it was created. Of those only half actually contribute to them. And (are you sitting?) eighty per cent of people with a tax-free savings accounts have the money in savings. Yup. High-interest savings accounts paying 1.5% or maybe two.” Currently, Canadians are allowed to contribute a maximum of $25,500 to their TFSA. That’s $5,000 per year from 2009 to 2012, and $5,500 for 2013. However for all the benefits of the TFSA, the majority of Canadians are not contributing. That’s a shame, because the TFSA makes an excellent retirement investment account, and the best tax-sheltered deal ...

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[adsenseTopPost] It’s that time of the year again – RRSP Season. Canadians will be lining up at the bank to either contribute to their RRSP (Registered Retirement Savings Plan), or borrowing for an RRSP loan. For most Canadians, that net benefit will be a tax-refund. What many Canadians don’t realize however, is the refund from contributing to their RRSP is not a gift. It has to be paid back later with taxes. That’s because any money withdrawn from your RRSP is considered income and is fully taxable. This makes the RRSP nothing more than a tax-deferral plan. Any money withdrawn from your RRSP (or RRIF) is considered income and is fully taxable. This makes the RRSP nothing more than a tax-deferral plan.  Many high-income Canadians can get a net-benefit from contributing to their RRSP, especially if it places them in a lower tax bracket. However for most Canadians, maximizing their TFSA (Tax Free Savings Account) makes more sense. The key is to avoid looking at the short-term ...

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The following is a guest post by Todd R. Tresidder, founder of Financial Mentor. Retirement planning doesn’t have to be difficult. It’s not rocket science. In fact, just getting the basics right is often good enough. Unfortunately, most people don’t get the basics right. According to the Employee Benefit Research Institute Retirement Confidence Survey less than 42% of employees have actually calculate how much to save for retirement. The research also shows how this very simple action greatly increases your chances of achieving your retirement savings goals.   Below we’ll look at the 3 essential action steps you need to complete so that your retirement plan is on solid footing… Calculate Your Retirement Needs The starting point is to calculate how much money you will need for retirement. Don’t worry if you have no idea how to complete this step because online retirement calculators make it simple. Start by using your favorite search engine to locate a retirement planning ...

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In my mid to late 40’s, my focus of late has been more on planning for retirement and how I will generate a consistent monthly income to fund my retirement. I find myself in between the need to increase my portfolio through capital appreciation, but also for the need to generate monthly income in retirement. I can take early retirement nine years from now, and I fully plan on doing so! What I will need at that time is monthly income. I’ve weighed the pros and cons. I’ve come to the conclusion that I’m better off creating a stable portfolio of monthly income, through dividend stocks and bond ETFs. I feel this is more beneficial for me, than trying to hedge my bets on where the markets might or might not be nine years from now through indexing. Right or wrong, it’s a personal decision I’ve arrived to through my own investing experience. The bottom line is I prefer to hold shares in companies directly, rather than a basket of stocks in an index. Although Index ETFs such as XIU ...

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written by Hank Coleman My father-in-law was a bank executive for over thirty years at a large regional bank in the United States, and he amassed quite a bit of his company’s stock through options over his career. Now, in addition to his pension, he also has quarterly dividends that support him in retirement. That is the beauty of dividends. They are truly a passive income investment in most cases, and they can often help you to get more out of your finite investment resources than other options allowing you to more efficiently save for retirement. How Much Do You Need? I used to watch the share price of my father-in-law’s bank like a hawk. It gave me something great to talk to him about when the conversation lagged around the dinner table. I was amazed after a particularly brutal quarter of share price decline when he told me that he did not care because he was not interested in selling his shares. He only wanted the dividend and the security that the payments brought him in retirement. ...

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