“Where can I start looking to invest money?”

Roxanne M.

When you’re starting to invest, the options can seem overwhelming! However, before you make any decisions, there are some questions you should ask yourself:

How much do I have to invest? You can start to invest with any amount of money, but some investments may require you to set up an account or get investment advice – which may involve fees.
How much (if any) can I afford to lose? Not only should you consider how much risk you’re able to take, you need to think about how much risk you’re willing to take – this is your risk tolerance.
Do I need access to my money? With some investments, you must lock-in your funds for a set period of time (the term). If you need access to your money at all times, these might not be right for you.
Do I understand the investment I am considering? Above all, it’s important to fully understand how an investment works and what risks are associated with it. For example, is there a chance you’ll lose your whole investment? Ask questions where you invest, and learn about different types of investments on GetSmarterAboutMoney.ca.

You can invest money through an advisor at your bank or financial institution, through a registered financial advisor or an online investment advisor.

Jul 15, 2016
Basics,

“Why do different institutions offer different interest rates?”

x

“Why do different institutions offer different interest rates?”

Edward J. T.

Thank you for submitting your question to Re: Investing.

Interest rates are determined by different factors such as the Bank of Canada’s rates which can either increase or decrease the cost of borrowing. Different market and business factors can also contribute to interest rates offered by institutions.

Know your investment time horizon, if you prefer a locked in or redeemable investment (for example with a GIC) and shop around to compare interest rates. Be certain to compare rates for the same types of investments (e.g. compare GICs to GICs) to help eliminate outlying factors.

Resources on GetSmarterAboutMoney.ca including, the GIC hub and choosing a GIC will help to build your knowledge in this and other areas. Speak with a registered financial representative for personalized investment advice.

Nov 15, 2018
Basics, Products,

“How do I participate in a mutual fund?”

“Can I cash out my segregated fund?”

“How can I get started with investing?”

“What happens to my RRIF when I die?”

x

“What happens to my RRIF when I die?”

Glen

Thank you for submitting your question to Re: Investing.

What happens to the money in your RRIF after your death – and the taxes on it – will depend on:

whether or not you name a beneficiary for your RRIF, and
who you choose as your beneficiary.

The beneficiary is the person or organization you choose to inherit the money in your RRIF. Learn more about what happens to your RRIF when you die including, what happens if you name a beneficiary or you don’t. You may also wish to review previous Re: Investing RRIF questions for further insight.

The resources on GetSmarterAboutMoney.ca including, the RRIF and Planning for retirement hubs may help build your knowledge in these and other areas. Speak with a registered financial representative for personalized investment advice.

Nov 15, 2018
Basics, Products,

“How do I open an RRSP?”

“What are futures?”

“Should I open a self-directed or fully-managed RRIF?”

x

“Should I open a self-directed or fully-managed RRIF?”

Sheila

Thank you for submitting your question to Re: Investing.

If you’re a knowledgeable investor and want flexible investment options, like being able to self-manage the mix of the investments held within your RRIF—of which you may hold many different kinds including, GICs, mutual funds, ETFs, segregated funds, stocks, and bonds—a self-directed option may fit your needs. Alternatively, if you have a lot of retirement savings or a more complex financial situation, a fully managed RRIF where a professional money manager creates and manages a custom portfolio to fit your goals and situation may be beneficial.

The resources available on GetSmarterAboutMoney.ca will help build your knowledge on topics like, the types of RRIFs and how RRIFs work. Speak with a registered financial representative for advice to determine which path is best suited for you.

Nov 13, 2018
Basics, Products,

“Are risk and return related?”

x

“Are risk and return related?”

Pearl

Thank you for submitting your question to Re: Investing.

Risk and return are connected. Generally, the higher the risk of an investment, the higher the potential return, but there is no guarantee a higher return will be received by accepting more risk.

While risk cannot be avoided, there are methods that can help reduce it such as, taking advantage of diversification—a way to try to reduce it by choosing a mix of investments, different time-horizons (or the length of time you hold an investment), and understanding your own tolerance to risk can help make informed decisions and reduce risk.

The resources available on GetSmarterAboutMoney.ca will help build your knowledge on investing and other topics including, types of investment risk and types of investments for different time horizons. Speak with a registered financial representative for personalized advice.

Nov 13, 2018
Basics,

“Can I withdraw money from my RRSP / RRIF to pay off bills?”

“Should I withdraw from my RRIF to pay off debt?”

x

“Should I withdraw from my RRIF to pay off debt?”

Kris

Thank you for submitting your question to Re: Investing.

We are not able to provide financial, tax or legal advice however, we try to provide general information to help you take the next step.

There are two key decisions you must make with a RRIF, how much money to withdraw from your RRIF and when. While there is a minimum amount you must take out each year, there is no maximum amount. All withdrawals are fully taxable.

Consider comparing loan costs with tax or other financial implications resulting from a withdrawal before proceeding. Visit the resources available on GetSmarterAboutMoney.ca to build your knowledge including, the managing debt and the RRIF hubs. Speak with a registered financial representative for personalized advice that fit with your financial goals.

Nov 13, 2018
Basics, Life events,

“Should I buy a home or invest the money?”

x

“Should I buy a home or invest the money?”

Jody

Thank you for submitting your question to Re: Investing.

Like all investments, investing in real estate can offer a range of benefits, but there is no guarantee that a real estate investment will earn you income or profit.

Real estate is one of many industries or asset class in which you can invest. The more you invest in real estate over other industries (such as financial services, energy, telecommunications, or health care) the more you become exposed to the risks and uncertainties of the real estate market.

Before investing, there are questions to ask that may help you clearly think through your investment decisions. Resources on GetSmarterAboutMoney.ca including, the real estate hub will help to build your knowledge in this and other areas. Speak with a registered financial representative for advice that fits with your financial situation and goals.

Nov 09, 2018
Basics, Life events,

“Is investing in a cannabis company risky?”

x

“Is investing in a cannabis company risky?”

Charles

All investments, including those made in the cannabis industry, come with some amount of risk. While there has been strong investor interest leading up to the legalization of recreational marijuana use, there are still significant risks. The cannabis industry, like any emerging sector, faces risks that can affect potential investment returns. Learn more about the investment risks in the cannabis industry from our investing in cannabis hub.

It’s important to understand risk as it relates to investing. Generally, the higher the potential return of an investment, the higher the risk. But there is no guarantee that you will actually get a higher return by accepting more risk. Learn more about the risk-return relationship.

Finally, when researching a company or investment product, ask yourself how it would fit into your financial plan. You may speak to registered financial representative or visit us at GetSmarterAboutMoney.ca for more information on investing.

Nov 09, 2018
Basics,

“How does a mortgage work?”

“Can I buy stock in an RRSP?”

“How do you transfer between TFSAs without penalty?”

“Can I recover the withholding tax on my U.S. equities?”

“Does an RESP take away contribution room from an RRSP?”

“What is the difference between a CFP and a stock broker?”

“Do brokers hold an inventory of stocks?”

“When an RRSP is converted into a RRIF will its value change?”

“Do ETFs fluctuate in a recession?”

“How do joint annuities work?”

“Can I transfer RRSP funds to another financial institution without penalty?”

“Can I claim the dividend tax credit for stocks held in my RRSP?”

“Should I transfer my mutual fund to another institution to save on fees?”

“Are there risks when investing within an RRSP?”

“Can I transfer stocks into my TFSA investment account?”

“What ETF’s can I trade in my TFSA?”

“How do I open an investment TFSA vs a savings TFSA account?”

“Can foreign funds be held within a TFSA and are there tax implications?”

“How do I determine the contribution limits for an RRSP or TFSA?”

“Can US equities be held in a RRIF?”

“How are investments taxed?”

x

“How are investments taxed?”

Anna G.

When thinking about how investments are taxed, the type of account(s) matters. Registered accounts have different tax status than non-registered accounts. Registered accounts include RRSPs, RRIFs, RESPs and TFSAs.

With RRSPs for example, you don’t pay tax on what you earn while your money is in the investment or plan, but certain withdrawals are fully taxed as income. With TFSAs you don’t pay tax on what you earn while your money is in the plan – or when you take it out. All investments held in non-registered accounts are subject to tax. As an investor expect to pay tax on interest-bearing investments, dividend-paying investments, capital gains and foreign investments.

Learn how income tax and RRSP and TFSA contributions work. Speak with a qualified professional for personalized assistance.

Oct 10, 2018
Basics, Products,

“Can I income split my RRIF withdrawals?”

“How are annuities protected?”

“If my spouse is the beneficiary of my RRIF, what happens when I pass on?”

“How do I buy stocks within a RRIF?”

x

“How do I buy stocks within a RRIF?”

Joe

You can hold many types of investments in a RRIF, including GICs, mutual funds, stocks and bonds. It’s important to note that once a RRIF is set up, you can’t make any more contributions to the plan and you must make minimal withdrawals each year.

You may be able to buy specific stocks in your RRIF depending on the type of RRIF you have. For example with a self-directed RRIF, you can change the investments you hold in your RRIF on your own as your needs change or the markets shift. If you have a fully managed RRIF, you can talk to your portfolio manager about your investment options.

With any investment, it’s important to consider how it fits with your overall financial plan. Here are 6 helpful tips to help define your financial goals.

Sep 19, 2018
Basics, Products,

“Can I make RRSP withdrawals if I am also making repayments under the Home Buyers’ Plan?”

x

“Can I make RRSP withdrawals if I am also making repayments under the Home Buyers’ Plan?”

Jas

The Home Buyers’ Plan (HBP) is a federal government program that allows you to borrow up to $25,000 from your RRSP tax- free to fund your home purchase. You have up to 15 years to repay the amount you borrowed. You must start to make repayments in the second year after the year in which you made your withdrawal(s).

You can take additional money out of your RRSP at any time before you retire — for example, to cover an emergency. But you will pay an immediate tax on the money you take out, and possibly more at tax time. And you’ll permanently lose the contribution room you originally used to make the contribution. Learn more about making RRSP withdrawals before you retire including withholding tax rates based on the province which you live.

Sep 19, 2018
Products, Regulation and policy,

“How do I evaluate a stock?”

“Is there a transaction limit for the number of times I can buy and sell stocks in an RRSP?”

x

“Is there a transaction limit for the number of times I can buy and sell stocks in an RRSP?”

Stephane L.

We are not able to provide financial, tax or legal advice, however we always try to provide general information to help you determine the next step.

There is no predetermined limit for the number of times you can buy or sell stocks in your RRSP within a specified period.

However, the Canada Revenue Agency (CRA) may deem day trading and speculative trades as business income. The CRA may consider several factors including the frequency of trades, how long a stock was held before it was sold, whether the stock was bought on margin, and the investment knowledge of the investor.

When buying or selling a stock, it’s important to keep in mind how each trade fits into your financial plan.

Speak to a professional or a financial representative to learn more about your options.

Sep 19, 2018
Regulation and policy,

“Should I open an RRSP or TFSA?”

x

“Should I open an RRSP or TFSA?”

Alanna

We are not able to provide financial, tax or legal advice, however we always try to provide general information to help you determine the next step.

TFSAs and RRSPs both offer tax advantages to help you reach your savings goals; however, there are important differences between the plans. For example, RRSP contributions are made with pre-tax dollars while TFSA contributions are made with after-tax dollars. You can make an RRSP contribution as long you have earned income whereas an individual must be at least 18 years old to open a TFSA.

Our Comparing TFSAs and RRSPs page on GetSmarterAboutMoney.ca highlights additional similarities and differences.

Whether you should open an RRSP, a TFSA, or both, will depend on your financial circumstances, goals and tax situation.

Speak to a financial representative to learn more about your options.

Sep 19, 2018
Basics, Products,

“What is a fee-based advisor?”

“How does the CRA know if I made TFSA contributions?”

“Can I transfer my mutual funds from one bank to another?”

“I would like to start investing my money. Are there investments I can make starting in the range of $500-1000, rather than $5000?”

“I am 55 and not working, with no pension. Should I withdraw from my TFSA, RRSP or non-registered accounts first?”

x

“I am 55 and not working, with no pension. Should I withdraw from my TFSA, RRSP or non-registered accounts first?”

Rob P.

Before you make that decision, speak to a financial representative and understand what will happen when you withdraw money from each type of account. We are not able to tell you which option is the best one for you.
– Tax-Free Savings Account (TFSA) – Because you make contributions with after-tax dollars, you do not pay tax when you take money out of your TFSA. You don’t pay tax on investment earnings. Withdrawals can affect your contribution room.
– Registered Retirement Savings Plan (RRSP) – your financial institution will hold back the withholding tax on the amount you take out and pay it to directly to the government on your behalf. You will have to report the amount you take out as income on your tax return. At that time, you may have to pay income tax on that amount.
– non-registered accounts – non-registered investment accounts have no special “tax status”. You do not pay tax when you take money out of a non-registered account.
– cost of advice – there may be fees associated with the account where the investments are held, regardless of the type of account. Find out more about these types of fees and charges.

Speak to a tax professional or financial representative before making withdrawals from any account.

Sep 05, 2018
Products,

“What is a better investment – paying an extra $1000/month on my mortgage to pay it off faster, or putting that money in a 4% investment?”

x

“What is a better investment – paying an extra $1000/month on my mortgage to pay it off faster, or putting that money in a 4% investment?”

Michael

Thank you for your question to Re:Investing. We are not able to provide specific investing advice, such as which option would be best for you.

In general, you will want to compare the average rate of return on the investments you are considering vs. the mortgage rate (now and an estimate of rates for coming years) and decide which one appears to offer the greatest return on your investment. However, there are other things to consider:

1. Your risk tolerance: For example, if you have a low risk tolerance, paying down a mortgage may be more attractive to you. There are many types of risk to consider. It is also important to consider that the higher the potential return, the higher the risk.
2. Getting rid of debt – is paying off your mortgage the most important debt for you to pay off?
3. How will Compound Interest affect investments.

Use our Pay Down Debt or Invest Calculator. Speak to a financial representative to help you decide which option is best for your investing goals.

Sep 05, 2018

“Can I close my RRSP at any time?”

“I have a DCPP (Defined Contribution Pension Plan) and an RRSP. Can I put them into one RRIF after age 71?”

x

“I have a DCPP (Defined Contribution Pension Plan) and an RRSP. Can I put them into one RRIF after age 71?”

Gene E.

A Registered Retirement Savings Plan (RRSP) can be converted to a RRIF at any time, but no later than the end of the year you turn 71. Once you open a RRIF, you are required to make minimum withdrawals, but no maximum.
You open a Registered Retirement Income Fund (RRIF) by transferring money from your RRSP. Transfers from other registered plans, such as defined contribution pension plans (DCPP) are allowed under certain circumstances. However, the rules relating to DCPP can be complicated, and are different depending on the province in which you reside. Typically you have two options for your DCPP at retirement:
1. Transfer to an individual locked-in income fund (LIF) – similar to a RRIF – most provinces require you to withdraw income each year between minimum and maximum amounts, or
2. Buy an annuity from an insurance company – a contract that guarantees to pay you an income for life.
To find out if you have options to combine your DCPP and RRSP into one RRIF by age 71, speak to a financial representative.

Sep 05, 2018
Products,

“Is it wise to invest all of my money with one investment firm?”

x

“Is it wise to invest all of my money with one investment firm?”

Diana B.

The key to diversification is to not put everything in one investment. There can be benefits to having one investment firm manage your investments. However, an investor may decide to invest with more than one firm to access a wider range of investment options. Benefits of having everything with one firm might include convenience and the ability for one firm to help you with investing decisions and annual check in to assess for any changes to be made to investing decisions. Here’s more about what you can expect from your financial representative.

One of the basic principles of investing is to ensure that your investments are diversified to reduce the risk of your portfolio. This is usually done by choosing a mix of investments.

Sep 05, 2018
Basics,

“What are the tax implications if a non-spouse adult is the beneficiary of an RRSP?”

“I have an existing mortgage where I am the co-signer with my spouse. How will separation affect my ability to get a second mortgage? Can my daughter co-sign on a mortgage?”

“How does the announcement of a new product affect the stock price of that company’s shares?”

x

“How does the announcement of a new product affect the stock price of that company’s shares?”

Stephen

There are many factors that can affect stock prices. Typically if a public company is launching a new product, they will file a news release on the System for Electronic Document Analysis & Retrieval (SEDAR). If the company suspects the new product will affect the price greatly, they will arrange a halt of their stock through the Investment Industry Regulatory Organization of Canada (IIROC) to allow the market to absorb the news, so that all investors have the same information when making investment decisions about their stock. Whether a new product will have an affect on the stock can be associated with other factors such as:

The industry of the company.
Investor sentiment about the new product.
Interest rates

Speak to a financial representative for advice about the affect a new product might have about a specific company.

Aug 30, 2018
Basics,

“Can I purchase Series F mutual funds without going through an advisor?”

“How do you smartly use a home equity line of credit?”

x

“How do you smartly use a home equity line of credit?”

Wanwenzeng

Borrowing against your home can free up cash to use for other expenses and allows you to stay in your home. However, borrowing against your home requires monthly payments, does not eliminate other costs (like paying property taxes, maintenance and home insurance), and could add costs. For example, you may have to pay appraisal fees, application fees and legal fees to get the loan.

Make sure you know about all the costs along with the advantages and disadvantages of borrowing against the value of your home. You can get a home equity loan or a line of credit if you’ve paid off some of your mortgage. If you’re over age 55, you’re also eligible to apply for a reverse mortgage.

Learn more about borrowing against your home and reverse mortgages. Speak to a financial representative to learn more and to decide whether this option is right for you.

Aug 24, 2018
Basics,

“Should you withdraw funds and close your RRIF so that your family does not pay tax on it when you die?”

x

“Should you withdraw funds and close your RRIF so that your family does not pay tax on it when you die?”

Suzanne

While we try to provide general information to help you get started, we are not able to provide advice.

Withdrawing funds from a RRIF before you die will have tax consequences, including withholding taxes and the full amount of the withdrawal must be included in your annual income. Learn more about making withdrawals from your RRIF. In addition, the withdrawn funds may then be added to your estate at the time of your death and subject to Estate Administration Tax.

If you name a beneficiary on your RRIF, Your RRIF won’t be included in the calculation of probate fees on your estate. Learn more about what happens to your RRIF when you die.

Speak to a financial representative or estate lawyer to understand your estate and tax planning options.

Aug 24, 2018
Life events, Products,

“What happens to stock is one company merges with another company?”

“Do I need to pay taxes on a trade profit if I do not take the funds out of my RRIF?”

“What is the tax rate on foreign interest?”

“Can I borrow money to invest? Where can I borrow?”

x

“Can I borrow money to invest? Where can I borrow?”

Sivagobi T.

Borrowing to buy investments can be an effective way to boost your potential returns. This is called using leverage. As long as your investment increases at a rate that is higher than your borrowing costs, you can make money. But taking on debt involves more risk than paying for an investment outright with cash. Here are four ways to borrow to invest:

Take out a loan or line of credit
Borrow against your home equity
Buy on margin
Short sell stocks

All of these options come with risks – you could lose more than you originally invested. Think carefully about your options and speak to a financial representative to understand whether borrowing to invest is right for you. Learn more about these borrowing options.

Aug 16, 2018
Basics,

“Where can I invest small amounts of money for high returns?”

“Can you transfer funds from an RRSP to a child’s RESP?”

“If the MER on a mutual fund is 2.55% and the rate of return is 8.03%, is the actual rate of return 5.48%?”

x

“If the MER on a mutual fund is 2.55% and the rate of return is 8.03%, is the actual rate of return 5.48%?”

Janet

A fund’s management fee and operating expenses make up a fund’s management expense ratio or MER. They are paid by the fund and are expressed as an annual percentage of the total value of the fund. The management fee paid to the fund management company includes: overseeing the fund, hiring a portfolio manager to make the investment decisions, and hiring other companies to assist in the administration of the fund. Operating expenses include: bookkeeping and administrative fees, marketing costs, filings with the provincial securities commissions, legal fees, audit fees, custodian fees, and GST/HST.

While you don’t pay these expenses directly, they affect you because they reduce the fund’s returns. This means returns are reported net of MER. Information on fees can be found in the latest version of Fund Facts – this document should be available on the fund company’s website or through your financial representative. Learn more about mutual fund fees on GetSmarterAboutMoney.ca.

Aug 16, 2018
Products,

“Can you borrow from your RRSP?”

x

“Can you borrow from your RRSP?”

Heather L.

There are specific programs set up to allow individuals to borrow from their Registered Retirement Savings Plan (RRSP). These are the Home Buyers’ Plan (HBP) for a down payment on your first home, and the Lifelong Learning Plan (LLP) to pay for education. Learn more about the HBP and LLP on GetSmarterAboutMoney.ca.

In some cases, you may be able use money in your RRSP as collateral for a bank loan. This may not be allowed depending on your bank policy or RRSP administration agreement. Make sure you get expert advice from a tax planner or financial advisor before you go ahead. If you don’t follow the rules, you’ll have to pay tax on the RRSP money you use as collateral.

Speak to a financial representative to learn more about these options and whether you are eligible.

Aug 16, 2018
Products,

“Does deferred profit sharing have a cut-off at age 71?”

“Where do I find a complete list of holdings in a mutual fund beyond the 10 listed in Fund Facts?”

“When is it better to save for retirement in a TFSA?”

x

“When is it better to save for retirement in a TFSA?”

Lisa P.

Deciding where to save for retirement is a decision that requires evaluating your own personal financial situation and financial goals. A Tax-Free Savings Account (TFSA) can be used to save for any goal. You open a TFSA using after-tax dollars (your contribution is not tax-deductible), but your savings grow tax-free and your withdrawals are not taxable.

For many people, the decision to save for retirement also includes Registered Retirement Savings Plans (RRSPs). For a quick summary of the differences between TFSAs and RRSPs, read this previous Re: Investing question: “Which offers higher returns? TFSA or RRSP?”.

Speak to a financial representative for a comparison of these two options that considers your specific financial needs and goals, and for information about other retirement savings options that may be available to you.

Aug 02, 2018
Basics, Products,

“Can a RRIF be owned by more than one person?”

x

“Can a RRIF be owned by more than one person?”

Doug B.

Yes, if you hold a Spousal Registered Retirement Savings Plan (RRSP), it can be closed and converted to a Spousal Registered Retirement Income Fund (RRIF).

A spousal RRSP is registered in the name of your spouse or common-law partner. They own the investments in the RRSP, but you contribute to it. You get the tax deduction for any contributions you make to a spousal RRSP. Any contributions you make reduce your own RRSP deduction limit for the year. They won’t affect how much your spouse can contribute to their own RRSP. Learn more about how spousal RRSPs work and how to qualify on GetSmarterAboutMoney.ca.

Speak to a financial representative to learn your options and to understand the rules of a spousal RRIF.

Aug 02, 2018
Basics, Products,

“I am saving for a deposit on a house – is an RRSP or TFSA better?”

x

“I am saving for a deposit on a house – is an RRSP or TFSA better?”

Joseph

A Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) are both options when saving for a down payment on a house. Here’s how they work:

TFSA – You can use a TFSA to save for any goal. You make contributions with after-tax dollars (your contributions are not deductible), and withdrawals are tax free.
RRSP – RRSPs are generally used to save for retirement. You make contributions with pre-tax dollars (your contributions are deductible). If you are withdrawing money to make a down payment on your first home, you may be able to use the Home Buyers’ Plan (HBP), which allows you to withdraw up to $25,000 – but you must pay this money back within 15 years or the withdrawals will be added to your income.

Speak to a financial representative to discuss your options to save for a down payment. Learn about saving for a down payment and government help for first-time home buyers on GetSmarterAboutMoney.ca.

Aug 02, 2018
Life events,

“Are there any restrictions on which income you can deduct RRSP contributions against?”

“Do I need caregiver consent to open an RESP for my nephew?”

x

“Do I need caregiver consent to open an RESP for my nephew?”

Tania

A question similar to yours has already been posted on Re: Investing. Read this previous answer to learn more about opening a Registered Education Savings Plan (RESP) for a relative.

You must have the child’s social insurance number (SIN) to set up an RESP. Caregiver authorization and information is required to apply for certain RESP grants and bonds. You may also consider consulting caregivers regarding additional RESPs that may be set up in the child’s name. This is because RESPs have a lifetime contribution limit per child – $50,000 – and government grants and bonds are provided on an annual basis based on annual contributions, up to certain limits.

Employment and Social Development Canada (ESDC) has information about RESPs and you may consider contacting ESDC to understand the rules regarding opening an RESP for a relative.

Jul 26, 2018
Products,

“Is there any downside to converting an RRSP to a RRIF early?”

x

“Is there any downside to converting an RRSP to a RRIF early?”

Roy B.

A Registered Retirement Savings Plan (RRSP) can be converted to a Registered Retirement Income Fund (RRIF) at any time, but must be closed by the end of the year you turn 71. You can keep your RRSP investments and continue to grow your savings tax-free. However, beginning the year after a RRIF is opened, you must begin mandatory minimum withdrawals. These withdrawals are subject to withholding tax and included in your annual income for tax purposes.

We cannot advise on whether it is good or bad to convert an RRSP to a RRIF early. Speak to a financial representative to understand your options when considering converting an RRSP and to decide whether closing your RRSP early is right for you. You can learn more about getting retirement income from an RRSP and making withdrawals from a RRIF on GetSmarterAboutMoney.ca.

Jul 26, 2018
Life events, Products,

“How much money do you need to start investing?”

x

“How much money do you need to start investing?”

Oscar

You don’t need a lot of money to start investing. For example, you may start saving money and compounding your savings using a high-interest savings account or other low-risk investment, like a GIC. Other types of investments – like mutual funds and exchange-traded funds or stocks – may require more to get started because of the consideration of transaction costs and other fees.

Before you start investing, set your financial goals. Start by understanding your current financial situation using four numbers – what you own, what you owe, what you earn and what you spend. Once you know these numbers, you can decide how much you have to set aside for your savings and investments, and setting a goal will help you determine which investment options are right for you.

Learn more about getting started and read four things to consider when you start to invest on GetSmarterAboutMoney.ca.

Jul 26, 2018
Basics,

“Which offers higher returns? TFSA or RRSP?”

x

“Which offers higher returns? TFSA or RRSP?”

Loralie Y.

Registered Retirement Savings Plans (RRSPs) and Tax-Free Savings Accounts (TFSAs) do not offer returns on their own – they are accounts that hold investments. Depending on the investments you hold in a TFSA or RRSP, your return will vary.

One consideration when comparing these two savings plan options is the effect of tax. RRSP contributions are tax-deductible, meaning they are made with pre-tax dollars. RRSP withdrawals are fully taxable – however generally withdrawals are not made until retirement, when your income (and tax rate) may be lower than it is when you contribute.

TFSA contributions are not deductible and are made with after-tax dollars. TFSA withdrawals, which can be made at any time for any reason, are tax free.

Consider taxes as well as your savings goals to decide which may be right for you, or to consider a combination of both. Speak to a financial representative for a review of your options, and see a quick comparison of TFSAs and RRSPs on GetSmarterAboutMoney.ca.

Jul 26, 2018
Basics, Products,

“What is the difference between distributions and dividends? Are they taxed differently?”

x

“What is the difference between distributions and dividends? Are they taxed differently?”

Bruce

Distributions are payments you get from a mutual fund or company stock. Funds must distribute any capital gains to shareholders at least once a year. This payment can take the form of cash or additional units. Some companies offer Dividend Reinvestment Plans (DRIPs). Taxation on distributions depends on the type of income received. In addition, distributions may increase or decrease the adjusted cost base.

Dividends are part of a company’s profits that it pays to shareholders in proportion to the total number of shares held. The Board of Directors sets the amount. For common shares, the amount varies. It may skip dividends if business is poor or the directors invest money in things like new equipment or buildings.

Investments held in registered plans – like RRSPs and TFSAs – are not taxed while funds remain in the plan. Speak to a financial representative or tax professional for more information about distributions and dividends, and learn about how investments are taxed on GetSmarterAboutMoney.ca.

Jul 26, 2018
Basics, Products,

“Who should be the beneficiary for my TFSA?”

x

“Who should be the beneficiary for my TFSA?”

Andrew

While we cannot tell you who should be the beneficiary of your Tax-Free Savings Account (TFSA), we can provide information TFSA beneficiary designations.

TFSA beneficiaries may be named as designated beneficiaries or successor holders. A survivor (spouse or common-law partner) can be named as either a designated beneficiary or successor holder. A survivor named as a successor holder assumes ownership of the TFSA. See examples of how successor holder ownership works on the Canada Revenue Agency (CRA) website. If no beneficiary is named, the TFSA contents become part of the estate.

We are not able to provide advice, and the above information is general in nature. Other factors may affect your options for TFSA beneficiaries. Speak to a financial advisor or tax professional to understand the rules in your province, and to learn more about choosing a TFSA beneficiary. You can read information about the death of a TFSA holder on the CRA website.

Jul 26, 2018
Life events, Products,

“If I contribute to my RRSP and then withdraw from my RRSP, does it effect my contribution limit for the year? Is it deductible?”

x

“If I contribute to my RRSP and then withdraw from my RRSP, does it effect my contribution limit for the year? Is it deductible?”

Amna S.

To answer this question, we will have to separate contributions to an RRSP, and withdrawals from an RRSP.

Contributions to an RRSP are tax deductible. You must have contribution room available. You can see your contribution room on your latest Notice of Assessment, or by contacting the Canada Revenue Agency (CRA). Learn more about RRSP contributions.

You can withdraw money from an RRSP, however withdrawals are fully taxable in the year they are made. You will also permanently lose the contribution room you used to make the original contribution. Special programs allow for tax-free withdrawals – for example, the Home Buyers’ Plan if you are purchasing your first home – but these funds must be paid back within a certain time period or they become taxable as well. Learn more about RRSP withdrawals.

If you want your savings to grow tax-free but also want to have some flexibility to withdraw money, you may consider looking into setting up a TFSA. Understand the rules for TFSA contributions and withdrawals before you open an account. Learn more about TFSAs.

Jul 26, 2018
Basics, Products,

“I have a defined pension plan and would like to start receiving monthly income. What is the amount I can withdraw?”

“When I convert my LIRA to an LRIF at the end of the year I turn 71, can I withdraw more than the prescribed amount?”

“Can you sign up for an RESP at a bank?”

x

“Can you sign up for an RESP at a bank?”

Dawn

Yes. The company that sets up your RESP is called the plan provider or promoter. RESPs from a financial institution — like a bank, trust company or mutual fund dealer — work a lot like any other investment account. RESPs offered by scholarship plan dealers are set up differently and have different rules. Different plan providers offer different types of RESPs.

Group RESPs are only offered by scholarship plan dealers. They tend to have higher fees and more restrictive rules than other plans. Read the plan summary document to understand the requirements of the plan before investing your money. If you choose a plan provided by a scholarship plan dealer, you have the right to withdraw all of your money within 60 days after signing your contract if you change your mind.

Take a look at this list of RESP providers in Canada. It also tells you which government grants each provider offers. Learn more about RESPs on GetSmarterAboutMoney.ca.

Jul 13, 2018
Products,

“How do I compound my investments?”

“Is it possible to hold an annuity within a TFSA that provides regular income?”

“Is there a certain limit per year that can be contributed to a Group RRSP, combining both payroll deductions and company match up?”

“Are Ontario mutual fund companies required to keep ACB records of clients?”

x

“Are Ontario mutual fund companies required to keep ACB records of clients?”

Cary N.

Record keeping requirements for mutual fund companies registered with the Ontario Securities Commission are outlined in National Instrument 31-103 – Registration Requirements, Exemptions and Ongoing Registrant Obligations. We have summarized some of the relevant information:

Firms are required to provide a “position cost” for securities in investor statements. Position cost information is an investment performance measurement tool that provides investors with a comparison to the market value of each security position they have open. Position cost may be either the book cost or the original cost of the securities – your firm must clearly explain the method they are using in your statement.

The position cost may be different than the adjusted cost base (ACB) for income tax purposes. Registered firms may provide clients with tax cost as supplementary information if they wish to do so, however this is not a requirement. Speak to your financial advisor or a tax professional to understand how to determine the ACB of your investments for tax purposes, and learn more about ACB from the Canada Revenue Agency.

Jul 06, 2018
Basics,

“If I open an RRSP now, can I contribute for past years like a TFSA?”

“How do I find a personal financial planner and advisor?”

“How do I de-register my RRSP? I would prefer to reinvest the remaining funds in my TFSA.”

x

“How do I de-register my RRSP? I would prefer to reinvest the remaining funds in my TFSA.”

Michael

You can take money out of your Registered Retirement Savings Plan (RRSP) before you retire, but you will pay an immediate withholding tax (up to 30%) on the money you take out, and possibly more at tax time. And you’ll permanently lose the contribution room you originally used to make the contribution. Learn more about making RRSP withdrawals before you retire.

You must first withdraw funds from your RRSP if you would like to use these funds to contribute to your Tax-Free Savings Account (TFSA). You must also have TFSA contribution room available.

Speak to a financial advisor to understand the process of closing your RRSP. An advisor can also help you plan withdrawals, and evaluate the pros and cons of making this change based on your financial goals and personal financial situation.

Jul 06, 2018
Basics, Products,

“Can I make a partial withdrawal from my DPSP?”

“I don’t think my employer is deducting enough tax from my paycheque. What can I do?”

“I have a child starting grade 9 and I would like to set up an RESP for his post-secondary education. How do I do it?”

x

“I have a child starting grade 9 and I would like to set up an RESP for his post-secondary education. How do I do it?”

Shawne D.

To open an RESP, the beneficiary must have a social insurance number and be a resident of Canada. There are many RESP providers in Canada, and they offer individual plans, family plans or group plans – each option has its own set of rules. Read this previous Re: Investing question to learn more about the types of plans. Shop around before you decide which plan best meets your needs. Once you have chosen an RESP provider, understand all the fees and penalties – any set-up fees, annual fees or penalties for making changes. Read all the information you receive before you sign up.

Group RESPs are only offered by scholarship plan dealers. They tend to have higher fees and more restrictive rules than other plans. Read the plan summary document to understand the requirements of the plan before investing your money. If you choose a plan provided by a scholarship plan dealer, you have the right to withdraw all of your money within 60 days after signing your contract if you change your mind.

Learn more about the steps to open an RESP, and learn about RESP government grants and bonds on GetSmarterAboutMoney.ca.

Jun 26, 2018
Basics, Products,

“Where can I invest in stocks in a TFSA? Where I have my TFSA now my only option is GICs.”

“Is there a fee when you redeem part of your RRIF for cash?”

“I have an RRSP – is it necessary to create a RRIF?”

x

“I have an RRSP – is it necessary to create a RRIF?”

Shirley

It is required to close a Registered Retirement Savings Plan (RRSP) by the end of the year you turn 71. It is not required to convert your RRSP to a Registered Retirement Income Fund (RRIF), however this is one option when closing an RRSP.

There are some benefits to converting an RRSP to a RRIF. You can continue to hold the same investments as you currently do, and your investments will continue to grow tax-free, until you withdraw them. Other options when closing your RRSP include setting up an annuity, or taking your RRSP in cash (with the full amount taxable). You may also consider a combination of the three options.

We are not able to provide advice. Speak to a financial advisor to understand your options when you are closing your RRSP. Learn more about getting retirement income from an RRSP on GetSmarterAboutMoney.ca.

Jun 20, 2018
Life events, Products,

“Where do I find the intraday NAV for an ETF?”

“I would like to set up an RESP for my baby – what is the difference between setting it up at a bank or other financial institution?”

x

“I would like to set up an RESP for my baby – what is the difference between setting it up at a bank or other financial institution?”

Pawan

Different financial institutions offer different types of Registered Education Savings Plans (RESPs). You can open an individual plan, a family plan or a group plan:

Individual plans are intended to pay for the education of one beneficiary.
Family plans can have more than one beneficiary, but the beneficiaries must be related.
Group plans are only offered by scholarship plan dealers. They tend to have higher fees and more restrictive rules than other plans. Read the plan summary document to understand the requirements of the plan before investing your money.

Learn more about different types of RESPs, and speak to a financial advisor to learn which option may be right for your family. Once you set up an RESP, use our RESP Savings Calculator to estimate how much you may be able to save for your child’s education.

Jun 19, 2018
Basics, Life events, Products,

“I will be closing my LIRA and RRSP this year – do I need to exhaust my LIF before touching the RRIF?”

x

“I will be closing my LIRA and RRSP this year – do I need to exhaust my LIF before touching the RRIF?”

Pat S.

Rules regarding withdrawals from a Life Income Fund (LIF) and Registered Retirement Income Fund (RRIF) differ and are regulated separately.

LIFs are generally set up after closing a Locked-in Retirement Account (LIRA). These accounts are regulated by the Financial Services Commission of Ontario (FSCO). LIF’s have a prescribed minimum and maximum withdrawal. Read some frequently asked questions about LIFs on FSCO’s website.

RRIFs are generally set up after closing a Registered Retirement Savings Plan (RRSP). RRSP rules are set and enforced by the Canada Revenue Agency. A minimum amount must be withdrawn from a RRIF each year, however there is no maximum withdrawal. Learn more about making RRIF withdrawals.

We are not able to provide advice. Before you close your LIRA and RRSP, speak to a financial advisor to understand your options – for example, LIFs have an option of a one-time unlocking option. Some or a portion of the amount that may be unlocked can be transferred to another account, like a RRIF.

Jun 19, 2018
Basics, Products,

“Is it better to have an RRSP or TFSA as a first-time home buyer?”

x

“Is it better to have an RRSP or TFSA as a first-time home buyer?”

Nadia

When saving for a down payment, Registered Retirement Savings Plans (RRSPs) and Tax-Free Savings Accounts (TFSAs) are both options for first-time home buyers.

With an RRSP, a first-time home buyer can withdraw up to $25,000 through the Home Buyers’ Plan (HBP), however this money must be paid back over a period of 15 years. Amounts not repaid are fully taxable.

With a TFSA, you can save tax-free and withdraw as much as you’d like. However, contributions to a TFSA, unlike an RRSP, are not tax-deductible.

Both options have advantages and disadvantages, and you should speak to a financial advisor to better understand which option is right for you – or you may consider a combination of both. You can also visit our article comparing TFSAs and RRSPs to learn more.

Jun 19, 2018
Basics, Life events,

“My deceased fathered opened an RESP for my daughter – how do I find the company?”

x

“My deceased fathered opened an RESP for my daughter – how do I find the company?”

Marcia A.

There is no database available to help you track down a missing Registered Education Savings Plan (RESP). However, there are a few things you can do to try to locate it:

Check old tax records. If you have the paperwork related to any RESP contributions, you can start by contacting that financial institution to see if they have a record of the account.
Contact past advisors. If your father’s finances were handled by a financial advisor, they (or their firm) may have information on where the account is located.
Contact financial institutions, banks and scholarship plan dealers. As a final option, contact major banks, financial institutions and scholarship plan dealers to see if an account is registered with them.

Jun 19, 2018
Products,

“If your stocks have a profit of $1,000 in a day, can you reinvest the profit back into the stock? If so, how do you do it?”

“What is the best way to invest money for the future that is secure and guaranteed?”

x

“What is the best way to invest money for the future that is secure and guaranteed?”

Carolyn C.

Thanks for your question. First, while we try to provide information to help you get started, we are not able to provide advice or investment recommendations. Speak to a financial advisor for specific recommendations that fit your portfolio and financial goals.

All investments carry some level of investment risk – however, some investments have more risk than others. Generally, taking on this additional risk usually comes with the chance at higher returns, but this is not guaranteed. Before you choose your investments, understand your risk tolerance, and the relationship between risk and return.

Be aware of the signs of investment fraud, including the promise of a high return with little or no investment risk. You can always contact the OSC’s Inquiries & Contact Centre if you suspect you may have been offered a fraudulent investment.

Jun 19, 2018
Basics,

“Can index funds be purchased in Canada?”

x

“Can index funds be purchased in Canada?”

Kaysy

Thanks for your question. When you hear that “the market is up,” people are often actually referring to an index. An index is a collection of securities or other assets that are meant to represent the performance of an economic sector or portion of the market in reference to a point in time. Indices can be broad or narrow in focus.

While people cannot usually invest directly in the indices themselves, they can invest in index funds. Index funds, which are sometimes referred to as index trackers, aim to follow or mimic the performance of a specific index; the value of an index fund will typically go up or down as the index goes up or down. Index funds are generally sold in the form of mutual funds or exchange-traded funds (ETFs).

Learn more about indices and index funds on GetSmarterAboutMoney.ca. Speak to a financial advisor to learn your investing options.

Jun 19, 2018
Products,

“In a no-income year, can I use the basic personal amount to recover tax money if I withdraw from my RRSP?”

x

“In a no-income year, can I use the basic personal amount to recover tax money if I withdraw from my RRSP?”

Bob

The basic personal amount is a non-refundable tax credit that allows you to earn a certain amount before being taxed.

You can take money out of your RRSP before you retire — for example, to cover an emergency situation. But you will pay an immediate tax on the money you take out. And you’ll permanently lose the contribution room you originally used to make the contribution. Learn more about making RRSP withdrawals before you retire.

Depending on your total income for the year, you may be required to pay additional tax at tax time, or you may be refunded some of the amount you paid. Speak to a tax professional to understand the effect of withdrawing from your RRSP, and to learn more about the immediate withholding tax.

Jun 19, 2018
Basics,

“Can I transfer my TFSA funds to a TFSA GIC?”

x

“Can I transfer my TFSA funds to a TFSA GIC?”

Andrea

Money held in a Tax-Free Savings Account (TFSA) can be held in cash, or invested in a variety of investments, such as GICs, mutual funds, stocks or ETFs.

If, for example, your TFSA is currently held in an investment like a mutual fund and you want to instead hold a GIC, you will need to sell your mutual funds. Speak to a financial advisor to understand the impact of selling your mutual funds, such as any costs or fees you must pay.

Speak to your financial institution or advisor before making a move. If you are transferring between two TFSAs at the same financial institution or moving funds to a TFSA at another financial institution, the transfer must be made directly between the TFSAs. If the transfer is done improperly and treated as a withdrawal, you may need to pay a penalty for over-contribution, or you may have to wait until next year to recontribute. Learn more about making transfers between TFSAs on GetSmarterAboutMoney.ca.

Jun 19, 2018
Products,

“Can a TFSA be held jointly by spouses?”

“Can you invest extra reverse mortgage funds to offset compounding interest and deduct interest taxes?”

x

“Can you invest extra reverse mortgage funds to offset compounding interest and deduct interest taxes?”

Carol

Reverse mortgages allow home owners to borrow against the value of their home. In most cases, you can borrow between 10% and 40% of your home’s value. It depends on what your home is worth, your age and interest rates. You can see some of the basic pros and cons of reverse mortgages on GetSmarterAboutMoney.ca. The money you borrow can be used for any purpose, and does not need to be paid back until you sell your home, or at your death. However, while you do not pay regular interest payments, your loan does build up debt over time, added to your mortgage, meaning your home equity may be reduced over time. In addition, reverse mortgages generally have higher interest rates than regular mortgages.

Based on current rules, you may be able to deduct the interest on the loan from your taxes if you are using a reverse mortgage to invest and create investment income (interest or dividends). This deduction may offset any tax you may pay on unsheltered investments. However, these rules can change at any time, and there is no guarantee you will make money on your investments. And you must eventually repay your loan. A reverse mortgage may also have additional costs. To get the loan, you may have to pay appraisal fees, application fees, legal fees and closing fees. We are not able to provide advice. Speak to a financial advisor or tax professional to learn more about reverse mortgages and how they may fit into your own financial needs and personal financial situation.

Jun 07, 2018
Products,

“How does one register as an ‘accredited investor’?”

x

“How does one register as an ‘accredited investor’?”

Duncan K.

Generally, securities offered to the public in Ontario must be issued with a prospectus, but there are exceptions. These exemptions are called prospectus exemptions. The accredited investor exemption rules are in place to protect investors from making unsuitable investments. The exemption allows companies to sell their securities to individuals who meet requirements for specific levels of net income and financial assets. Learn more about types of prospectus exemptions.

It is the obligation of the issuer to ensure that they can rely on a prospectus exemption, and that the purchaser meets the definition of “accredited investor”. There is no formal process to register as an accredited investor, but you should be prepared to provide documentation that proves you meet the income and financial asset requirements.

Contact the OSC’s Inquiries & Contact Centre to learn more about the rules that relate to prospectus exemptions.

Jun 08, 2018
Regulation and policy,

“How do you transfer a mutual fund to a GIC?”

x

“How do you transfer a mutual fund to a GIC?”

K. H.

Mutual funds and guaranteed investment certificates (GICs) are two separate and distinct investments. A mutual fund is a collection of investments, such as stocks, bonds and other funds owned by a group of investors and managed by a professional money manager. Learn about how mutual funds work.

A guaranteed investment certificate (GIC) is an investment that works like a special kind of deposit. When you buy a GIC, you are agreeing to lend the bank or financial institution your money for a set number of months or years (the term). You are guaranteed to get the amount you deposited back at the end of the term. Learn more about GICs.

If you want to use money currently invested in a mutual fund to purchase a GIC, you must first sell the mutual fund. Speak to a financial advisor to learn more and to confirm any charges that may be applicable. Learn more about how to sell a mutual fund, and how to buy a GIC.

Jun 08, 2018
Products,

“Can I transfer an offshore mutual fund to my TFSA?”

“Is there a percentage holdback when transferring RRIF investments between institutions?”

“I will realize a fully taxable capital gain this year. If I have unused RRSP contribution room, can I add the proceeds to defer taxes?”

“How does investor confidence affect stock prices going up or down?”

x

“How does investor confidence affect stock prices going up or down?”

Shreejit R.

Investor sentiment or confidence can cause the market to go up or down, which can cause stock prices to rise or fall. The general direction that the stock market takes can affect the value of a stock:

bull market – a strong stock market where stock prices are rising and investor confidence is growing. It’s often tied to economic recovery or an economic boom, as well as investor optimism.
bear market – a weak market where stock prices are falling and investor confidence is fading. It often happens when an economy is in recession and unemployment is high, with rising prices.

Factors that can influence investor confidence include company news and performance, industry performance, economic factors (e.g. interest rates, inflation, economic outlook, value of the Canadian dollar and changes in economic policy). Learn more about factors that can affect stock prices.

Jun 07, 2018
Basics,

“Can I transfer my RRIF back into a RRSP?”

“Can I transfer my RRIF and TFSA into a high-interest savings account?”

x

“Can I transfer my RRIF and TFSA into a high-interest savings account?”

Doug M.

Registered Retirement Income Funds (RRIFs) and Tax-Free Savings Accounts (TFSAs) are types of registered savings plans that allow you to save money for your financial goals – like buying a house or retiring – usually tax-deferred, or in the case of TFSAs, tax-free. Learn more about savings plans on GetSmarterAboutMoney.ca.

You can hold a variety of investments and cash in these types of plans. If you currently hold funds in your accounts and you would like to transfer some of your money into a high-interest savings account to be held within your savings plan, speak to a financial advisor to learn how this can be done and whether this move is right for you.

Learn about the types of investments that can be held in registered plans from the Canada Revenue Agency.

Jun 07, 2018
Products,

“Can I buy a second home using the equity of my first home?”

x

“Can I buy a second home using the equity of my first home?”

Remo B.

You may be able to use options to tap into your home equity – like a reverse mortgage or a home equity line of credit (HELOC) – to help fund the purchase of a second property.

However, consider that these options are loans and add to your debt levels, and may increase your monthly expenses. Debt can also affect your borrowing options as lenders look at your overall financial situation (including any outstanding loans) to determine how much you can borrow.

Consider these six questions to ask before you borrow. We are not able to provide advice about which option may be right for you. You can also visit GetSmarterAboutRealEstate.ca to learn more about real estate investments and the risks associated with them. Speak to a financial advisor to learn about the options that are available to you, and how they fit into your personal financial situation and future financial goals.

May 31, 2018
Basics, Products,

“How do you determine the management fees on a segregated fund to be able to compare them to management fees on a mutual fund?”

x

“How do you determine the management fees on a segregated fund to be able to compare them to management fees on a mutual fund?”

Linda P.

A mutual fund is a collection of investments, such as stocks, bonds and other funds owned by a group of investors and managed by a professional money manager. Mutual funds fees, such as management expense ratios (MERs), are outlined in its Fund Facts. Learn more about mutual funds.

Segregated (or seg) funds are an investment product sold by life insurance companies. They are individual insurance contracts that invest in one or more underlying assets, such as a mutual fund. Unlike mutual funds, segregated funds provide a guarantee to protect part of the money you invest (75% to 100%). Even if the underlying fund loses money, you are guaranteed to get back some or all of your principal investment. But you have to hold your investment for a certain length of time (usually 10 years) to benefit from the guarantee. Learn more about segregated funds.

Segregated funds usually have higher management expense ratios (MERs) than mutual funds. This is to cover the cost of the insurance features. Carefully consider your need for these features before you buy, and speak to a financial advisor to determine what may be right for you. Not all advisors are able to sell both mutual funds and segregated funds.

May 31, 2018
Products,

“How do I invest on my own in the stock market without an advisor’s help?”

x

“How do I invest on my own in the stock market without an advisor’s help?”

Bryan

Investing on your own generally involves using online tools and resources to research, buy and sell investments through a discount brokerage. Investing on your own also means doing your own research, and making your own investment decisions based on the information you find. Do you understand the various investment products that are available? Do you understand the tax implications of different products and plans? Whether bonds, stocks, mutual funds, ETFs or GICs, understand how they work and the risks involved. Most discount brokerages offer online access to financial research and information, although also you may wish to do your gather your own information from other sources.

With a discount brokerage, you will generally not get advice or help choosing your investments – this is part of the reason you pay lower fees overall compared to traditional full-service investment firms. This can be a benefit to you if you know how – and are willing – to do the work and research necessary.

If you’d prefer the assistance of a professional, you may consider finding an advisor. Understand the different types of advisors and the best options for you if you decide to get advice. Whether you are doing your own investing or you decide to get advice, always check registration of the firm and/or individual you plan to work with.

May 31, 2018
Basics, Services,

“Are taxes automatically deducted from CPP, or do I have to request taxes be deducted?”

“I am leaving my company with a defined benefit pension plan and the funds are being transferred to a LIRA – can it be used to buy a home?”

“Do I have to pay tax if I transfer money from a savings account to a new TFSA?”

x

“Do I have to pay tax if I transfer money from a savings account to a new TFSA?”

Regiane M.

Savings account interest is generally compounded daily, monthly or quarterly. Interest earned on savings not held in a registered plan is fully taxable as income.

When you move investments, such as stocks, into a registered account like a Tax-Free Savings Account (TFSA), you may trigger a tax event. Transferring funds from a savings account would not be considered this same type of “in-kind” transfer. However, your bank should issue you a T5 slip at the end of the year to report any interest you may have earned on your savings account.

We are not able to provide advice and the information above is general in nature. Speak to a financial advisor or tax professional to learn more about making this type of transfer, and to learn the date at which taxable interest on your account will end.

May 28, 2018
Basics, Products,

“What is the minimum down payment for buying a home?”

x

“What is the minimum down payment for buying a home?”

Lynn

For all home buyers, the minimum down payment for a home with a purchase price of $1,000,000 or less is 5% for the first $500,000 and 10% for any amount between $500,001 and $999,999. If the purchase price is $1,000,000 or more, a minimum 20% down payment is required. Different rules may apply if you are purchasing a second property.

Please note that mortgage approval is dependent on many factors and some lenders may require a down payment above than the minimum in order to qualify. Also, if your down payment is less than 20%, you are required to buy mortgage default insurance.

We have additional resources on home buying and real estate investing that you may be invested in. You may also visit the Financial Consumer Agency of Canada webpage on the minimum down payment.

May 28, 2018
Basics, Products,

“Can I reduce the minimum RRIF withdrawal by joint ownership?”

x

“Can I reduce the minimum RRIF withdrawal by joint ownership?”

John

You may be referring to using your spouse’s age to lower the minimum required withdrawal from a Registered Retirement Income Fund (RRIF).

If your spouse is younger than you, you can use their age to calculate your minimum amount. This may be a good strategy if you have other sources of income and want to leave your money in your RRIF for as long as possible. You don’t have to have a spousal RRIF or name your spouse as the RRIF beneficiary to use their age for your minimum amount. But you must tell your financial institution that you’re doing so before you make your first RRIF withdrawal. And you can’t change your mind later. Learn more about making withdrawals from a RRIF.

We are not able to provide advice. Speak to a financial advisor for information on making withdrawals from a RRIF, and your options regarding using your spouse’s age for the minimum amount.

May 28, 2018
Basics,

“Can I transfer my RRIF withdrawals to my partner’s name for income tax purposes?”

“I’m interested in setting up a high-interest savings account, but I want to hold it in a TFSA – would I still get taxed?”

“Who can invest in a hedge fund?”

x

“Who can invest in a hedge fund?”

Herman

Because hedge funds are typically sold to investors under a prospectus exemption, not everyone can invest in hedge funds. There are rules about who can invest in hedge funds in Ontario. Typically, individual investors must qualify as accredited investors. Companies can also invest as accredited investors.

In addition, not everyone can sell hedge funds. Check the registration of the person offering hedge funds before you invest.

Learn more about hedge funds on GetSmarterAboutMoney.ca.

If you are unsure of the exempt market rules related to a product you are considering, or the registration of an individual or firm offering the product, contact the Ontario Securities Commission’s Contact Centre for more information.

May 28, 2018
Products, Regulation and policy,

“Can I keep stocks that are in my self-directed RRSP after I turn 71?”

“What happens to an RESP if the child doesn’t go to college?”

“There is cash listed on my RRSP statement. Where does it come from? Is it dividends?”

x

“There is cash listed on my RRSP statement. Where does it come from? Is it dividends?”

Dave

Registered Retirement Savings Plans (RRSPs) can hold a variety of qualified assets, including cash. Dividends from stocks you hold in your RRSP may be deposited in your RRSP as cash. You should be able to verify the source of the cash by speaking to your firm or financial advisor.

If you receive dividends and would prefer to purchase more shares instead of having these deposited as cash, you may be able to set up a dividend reinvestment plan (DRIP). A DRIP lets you automatically reinvest dividends by buying more shares without paying a commission. DRIPs tend to be offered by larger, well-established companies with a history of paying dividends. Check a company’s website to find out if they offer a DRIP. You can enrol yourself in the plan through the company’s transfer agent, or your investment firm may be able to do this for you. Learn more about DRIPs on GetSmarterAboutMoney.ca.

May 28, 2018
Products,

“Can I open two TFSA accounts?”

“Is the rate given for a GIC per year, or over the entire term of the GIC?”

“I received a call from the CRA – is it a scam?”

x

“I received a call from the CRA – is it a scam?”

Anonymous

Scam calls claiming to be from the Canada Revenue Agency (CRA) are becoming more common, and can be alarming. Often the callers will claim that you owe money and threaten legal action against you.

Never provide any personal information over the phone if you are not sure who you are speaking to. The best action to take in these cases is to hang up the phone. Sometimes scammers also contact people using email or text messages – in these cases, delete the messages and never click on any links provided.

If you think you do owe money to the CRA, you can call them back at the phone number listed on their website, or check CRA’s My Account online. Learn more about protecting yourself from this type of fraud from the CRA.

To report this type of fraud, contact the Canadian Anti-Fraud Centre.

May 11, 2018
Frauds and scams,

“This is a divesting question – where can older Canadians go to get unbiased information about turning investments into an income stream?”

“Do I have to declare dividends and interest from my self-directed RRSP when I do my taxes?”

“Do you have a RRIF calculator for retirees so I can determine how long my RRIF will last?”

x

“Do you have a RRIF calculator for retirees so I can determine how long my RRIF will last?”

Shirley

Thanks for your question, Shirley. We do not have a specific Registered Retirement Income Fund (RRIF) calculator. Our RRSP Savings Calculator can be used to estimate the income your RRSP will generate in retirement, based on specified years in retirement and investment return.

The Canadian Retirement Income Calculator is a government resource that allows you to calculate expected retirement income from all sources – including RRIFs, other registered plans (like TFSAs), company pension plans, CPP and OAS.

The calculators on GetSmarterAboutMoney.ca, as well as the Canadian Retirement Income Calculator are only able to provide estimated retirement income. To learn more about the income you may expect in retirement, and to discuss your financial needs in retirement, speak to a financial advisor.

Apr 25, 2018
Basics, Life events,

“I immigrated to Canada in August of 2011 – how much TFSA room do I have for 2011?”

“If I open a new TFSA in 2018, can I put $57,500 in the account – the total from 2009 to 2018?”

“What is the best calculator on your website to determine future investment worth?”

x

“What is the best calculator on your website to determine future investment worth?”

Paul

Thanks for your question, Paul! We have a variety of calculators on our website, GetSmarterAboutMoney.ca. Some of the calculators you can use to help estimate future investment worth are:

Compound Interest Calculator – this calculator allows you to see how your savings can grow over time using compound interest.
RRSP Savings Calculator – if you are using an RRSP to save for retirement, you can use this tool to estimate the future value of your RRSP and how long your savings will last in retirement.
TFSA Calculator – if you are using a TFSA to reach your savings goal, this calculator can help you estimate how much you will save, and compare it to savings in a non-registered account.
RESP Savings Calculator – if you are saving for your child(ren)’s education, this calculator will help you estimate how much you need to save, and how much you can save, adding in any applicable government grants and bonds.

See all of the tools and calculators on GetSmarterAboutMoney.ca.

Apr 25, 2018
Basics,

“Is there such a thing as a “set-up fee”?

“What can I do with my RDSP?”

x

“What can I do with my RDSP?”

Jason

The Registered Disability Savings Plan (RDSP) was established to help parents and others save for the long-term financial security of a disabled person (one who qualifies for the Disability Tax Credit). Four key points about RDSPs:

Savings grow tax free in the plan.
You can still get disability benefits.
You can invest funds in an RDSP in a variety of investments, including GICs, stocks, bonds and mutual funds. For a full list of investments, visit the Canada Revenue Agency website.
Until age 49, the beneficiary may be eligible for government contributions to the RDSP under the Canada Disability Savings Grant, and Canada Disability Savings Bond.

You can make lump-sum withdrawals at any time, with some additional rules regarding withdrawing bond or grant funds. The main function of an RDSP is to provide regular payments to the beneficiary, called lifetime disability assistance payments (LDAPs) no later than the year they turn 60. Learn more about receiving regular payments from an RDSP.

Speak to a financial advisor for advice related to investing in your RDSP, and making withdrawals.

Apr 24, 2018
Basics, Products,

“How can investing benefit me?”

x

“How can investing benefit me?”

Danny H.

There are many reasons why people choose to invest, but one reason is to meet personal and financial goals. For example, a specific goal may be:

Save $25,000 for a down payment on a house over the next 3 years.
Save $40,000 for your child’s education by the time they turn 18.
Save to create an income of $50,000 per year in retirement.

Setting specific goals allows you to determine what you need to do to meet these goals. Investing your savings may help you reach these goals faster. For example, if you put $1,000 in a chequing account that earns no interest, in one year, you will have $1,000. If you invest that same $1,000 in an investment that earns 5%, in one year you will have $1,050. In 2 years, you will have $1,102.50. This is because of the power of compound interest.

No on investment strategy is right for everyone. Speak to a financial advisor to learn how to make a plan and set your financial goals, and to understand which investment products may fit your life and risk tolerance.

Apr 24, 2018
Basics,

“Where do I get a LIRA?”

“To what extent can a capital loss lead to a tax reduction?”

“How can I find out if the advisor assigned to give advice on retirement planning and investing by the company is registered with OSC?”

“Can I open a new TFSA in any amount?”

“If I am over 70 and I do not want to use my RRSP. Can I continue contributing to my RRSP? Do I have to transfer the RRSP to a RRIF?”

“Is it worth it to invest in mutual funds within an RESP account?”

x

“Is it worth it to invest in mutual funds within an RESP account?”

Chiradee

Thank you for your question Chiradee. We are not able to provide specific advice such as what type of product is a good investment for an RESP account.

A Registered Education Savings Plan (RESPs) is a type of account that allows you to save for a child’s education after high school. There are tax benefits because there is no tax on the investment earnings, as long as they stay in the plan. There are other reasons to open an RESP. Until the end of the year the beneficiary is 17, the federal government also puts money into the RESP as a grant or bond. There are a number of investment options for RESPs including: stocks, bonds, mutual funds and GICs. Find out how you can open an RESP.

Read our brief overview on the different types of RESPs.
Speak to a registered financial advisor for advice about the options that work best for your RESP.

Apr 04, 2018
Products,

“What is the best investment strategy for an inheritance to get income during retirement years?”

x

“What is the best investment strategy for an inheritance to get income during retirement years?”

Rae

Thanks for your question Rae. We are not able to recommend specific products, but we are happy to provide resources to help you make an informed decision about where to invest.

Our inheriting money hub contains articles relating to ‘getting advice’ and ‘financial planning’ which may help you get started with building an investment plan. Before you decide how to invest money from an inheritance, make sure you look at your whole financial situation and determine if there are debts that you should pay off first. Learn how to create a balanced budget which can help you track spending and prepare for unexpected expenses.

Read about the risk-return relationship so that you are comfortable with your level of risk tolerance. Take some time to understand the different investment products and the pros and cons of each. Perhaps take the Investor Knowledge quiz to figure out if there are areas where you would like to learn more.

If you need help deciding what to invest in, speak to a registered financial advisor for advice about the options that work best for your retirement years.

Apr 04, 2018
Life events,

“What are the benefits of saving money in an RRSP?”

x

“What are the benefits of saving money in an RRSP?”

Brandon C.

There are a number of benefits to saving in a Registered Retirement Savings Plan (RRSP). For example:

Contributions are tax deductible – you claim your RRSP contribution as a deduction on your tax return
Savings grow tax-free – you won’t pay tax on investment earnings as long as they stay in your RRSP
You can borrow from your RRSP to buy your first home or pay for your education

There are other benefits which you can read about in 5 reasons to open an RRSP.

You may also be interested in learning about Tax-Free Savings Accounts (TFSAs) and the difference between TFSAs and RRSPs so that you can decide what type of plan suits your investment needs. Here is information about TFSA basics.

Speak to a registered financial advisor or tax professional for advice about the options that work best for your investment plan.

Apr 02, 2018

“Is it possible to withdraw funds from a RRIF and replace the funds a month later, without any tax payment being required?”

x

“Is it possible to withdraw funds from a RRIF and replace the funds a month later, without any tax payment being required?”

Marg H.

Thank you for your question, Marg.

All withdrawals from a Registered Retirement Income Fund (RRIF) are fully taxable. Also, once the RRIF is set up, you can’t make any more contributions to the plan. Therefore, you would not be able to replace the withdrawal in the same plan a month later.

The federal government sets the minimum amount you must take out of your RRIF every year, based on a percentage of the value of your RRIF. There is no maximum withdrawal limit. However, if you take out more than the minimum amount, you’ll also pay withholding tax on the excess amount. Your financial institution will hold back an amount, based on withholding tax rates, and pay it directly to the government on your behalf. Here is more information about how RRIFs work.

Speak to a financial advisor or tax professional if you need advice or assistance with understanding the tax consequences of RRIF withdrawals, and your options when making withdrawals from this type of account.

Mar 28, 2018
Products,

“It seems people make a lot of money by ‘day-trading’ stocks. How does this compare to investing for the long-term as a strategy?”

x

“It seems people make a lot of money by ‘day-trading’ stocks. How does this compare to investing for the long-term as a strategy?”

Matthew

Day trading means buying and selling investments – like stocks – within the same day. A day trader may base their decisions on financial analysis or speculation. It’s often high-risk and there’s no guarantee that you will make money.

There are many ways to invest. Generally, investing in the stock market for the long-term has been historically beneficial. This is because while share prices typically fluctuate up and down in the short-term, and sometimes by large amounts, the market has historically always recovered and trended upwards. By investing for the long-term, you are more likely to be able to weather “dips” in the market. Check out this Interactive Investing Chart to see how investments grow over time.

Before deciding which form of investing is right for you, take a moment to understand the risk of stocks and the risk-return relationship. You may also be interested to find out more about diversification, fees for buying and selling stock and making an investment plan.

If you need assistance understanding the different ways to invest and what suits your needs, speak to a registered financial advisor.

Mar 28, 2018
Basics,

“Can you transfer mutual funds to your spouse on your death?”

x

“Can you transfer mutual funds to your spouse on your death?”

Betty M.

There are different ways to name a beneficiary for mutual funds and you should speak to the financial institution or registered investment firm where your account is held, and also speak to an estate lawyer so that you fully understand the best options for your estate.

If your mutual funds are held in a registered account, such as a Registered Retirement Savings Account (RRSP) or Registered Retirement Income Fund (RRIF), one option is to name your spouse as the “successor annuitant” on your RRSP or RRIF. If this is done the successor annuitant will take over the accounts and won’t have to make any changes to investments or incur any fees. If they are not named as “successor annuitant”, the accounts will be collapsed and investments sold. There may be some disadvantages to your spouse. Read more about RRSP annuitants from CRA.

If your mutual funds are in a non-registered account your options may be different and you should speak to the financial institution or registered financial advisor where your account is held for instructions on how to name a beneficiary. As mentioned above, you may wish to speak to an estate lawyer about these options so that you fully understand them.

Read more about reducing your estate costs.

Mar 22, 2018
Life events,

“What are examples of government tax benefits?”

x

“What are examples of government tax benefits?”

Braulino S.

The federal and provincial governments provide tax benefits in a number of ways. Here are examples of ways in which individuals can take advantage of government tax benefits:

Registered Retirement Savings Plans (RRSPs) – these savings plans can help you save money tax-free until you retire. Here are 5 reasons to open an RRSP. Learn more about RRSPs.
Tax-Free Savings Accounts (TFSAs) – let you save tax-free – Learn more about TFSA basics.
Parents and tax – if you have children, there are various tax credits and deductions you can claim on your tax return.
Seniors and tax – here is a brief outline of tax credits available for seniors.
Students and tax – learn more about tax credits available for students.
Registered Retirement Income Fund (RRIF) – transfer money from your RRSP and your savings remain sheltered from tax until the money is withdrawn.

The list above is not exhaustive. Speak to tax professional about the various government tax benefits or contact the Canada Revenue Agency for more information.

Mar 22, 2018
Basics,

“Can I use an old RRSP account to buy stocks?”

“I want to transfer some of my RRSP to my child’s RESP. Can this be completed without a tax hit?”

“Can I hold inverse ETFs in my RRIF?”

“Why do I have to pay tax on money I withdraw from a RRIF? I set up the RRIF with funds from a savings account.”

x

“Why do I have to pay tax on money I withdraw from a RRIF? I set up the RRIF with funds from a savings account.”

John B.

A Registered Retirement Income Fund (RRIF) is an account registered with the federal government that provides a steady income in retirement. A RRIF is opened by transferring money from a Registered Retirement Savings Plan (RRSP). Transfers from other registered accounts such as pension plans are allowed in certain circumstances. However, funds are not transferred from a non-registered savings plan to a RRIF. Find out more about how RRIFs work.

Because contributions to an RRSP are made with pre-tax dollars, and is not taxed as long as it stays in the RRSP, you pay tax when you withdraw from the RRSP. If the RRSP was transferred to a RRIF, the tax is deferred until you make your withdrawals from your RRIF. All withdrawals from a RRIF are fully taxable.

Speak to a registered financial advisor or tax professional for more information about tax considerations relating to your RRIF.

Mar 22, 2018
Products,

“What type of bond does not provide voting rights?”

“At 85 years of age, are segregated funds a good investment option (to hold in RRIF or non-registered accounts)?”

x

“At 85 years of age, are segregated funds a good investment option (to hold in RRIF or non-registered accounts)?”

Bernice

Thanks for your question, Bernice. We are not able to provide individual investing advice. The following information may help you make an informed decision.

Segregated funds are an investment product sold by life insurance companies. Unlike mutual funds, segregated funds provide a guarantee to protect part of the money you invest (75% to 100%). However, you have to hold your investment for a certain length of time (usually 10 years) to benefit from the guarantee. You pay an additional fee for this insurance protection. Learn more about segregated funds.

Speak to a registered financial advisor or licensed insurance agent for advice about the options that work best for your investment plan.

Mar 19, 2018
Products,

“How do I know if a company has potential to grow?”

x

“How do I know if a company has potential to grow?”

Ishmael

Before you invest in a company, make sure you do your research. It is important that you understand the company’s business and its products or services. There is no guarantee, as there is always some level of risk with investing, but here are some things to consider so that you can be as comfortable as possible with your choices:

Financial performance – a company’s financial statements can help you understand how their business has done in recent years and how they are investing for the future. What are their assets vs. liabilities?
Business costs – are the costs of the business going up but the sales are not? This may be a warning sign.
Directors and officers – does the management of the company have a good track record?
Risk factors – you can find out about the company’s future risks by reading the management’s discussion and analysis (MD&A)

A public company’s financial statements, prospectus and MD&A are filed on the System for Electronic Document Analysis & Retrieval (SEDAR) at www.sedar.com. Learn more about where to get information on a company before you invest.
If you need help assessing the potential value of different companies and whether they are good options for your investment plan, speak to a registered financial advisor.

Mar 19, 2018
Basics,

“How are investments in syndicated mortgages, held in an RRSP account, protected?”

x

“How are investments in syndicated mortgages, held in an RRSP account, protected?”

Marta

A Registered Retirement Savings Plan (RRSP) is an account, registered with the federal government, that you can use to save for retirement. They have special tax advantages. Investments that can be held in an RRSP are called qualified investments. Qualified investments are described on the federal government’s website. Syndicated mortgages are not listed as qualified investments.

Our resource GetSmarterAboutRealEstate.ca provides details on what syndicated mortgages are, how they work and the risks associated with them. In particular, Investing in Real Estate states that “Syndicated mortgages are not insured by the Government of Ontario or any other investor protection fund, meaning there is no way to guarantee you will get your money back.”

Learn more about syndicated mortgages and other real estate investments in Understanding real estate investments.

All investments carry a certain amount of risk. Before deciding if any particular investment product is a good choice for you, create your investment plan and understand the relationship between risk and return. Speak to a registered financial advisor for advice about the options that are best for your investment plan.

Mar 19, 2018
Products,

“I opened a TFSA in 2017. At the end of December, I sold stocks from one company. My other stocks were not sold. What do I report?”

x

“I opened a TFSA in 2017. At the end of December, I sold stocks from one company. My other stocks were not sold. What do I report?”

Christine B.

Thank you for your question, Christine. Interest, dividends, or capital gains earned on investments in a Tax-Free Savings Account (TFSA) are typically not taxable either while held in the account or when withdrawn. There are certain circumstances under which taxes may be payable with respect to a TFSA, and these circumstances are described on the Canada Revenue Agency website.

Keep in mind that taking money out of a TFSA can affect your TFSA contribution room for the year. Here is information about TFSA basics.

Speak to a registered financial advisor, tax professional, or contact Canada Revenue Agency directly, for specific advice about what you need to report for your income tax return.

Mar 12, 2018
Products,

“My wife passed away recently. Her RRIF was to start in January. Can I take more than the minimum before it is transferred to me?”

“How can I find out information about a public/private company in Ontario before I invest in the company?”

x

“How can I find out information about a public/private company in Ontario before I invest in the company?”

Tony E.

If the company is a public company in Canada, disclosure documents are filed on the System for Document Analysis and Retrieval (SEDAR) at www.sedar.com. Information about principals in the company can be found in the disclosure documents on SEDAR (for example, the Management Discussion and Analysis will include information about compensation of executive officers and directors). Here is an article on where to get information on a company. There is also information on the OSC website about disclosure rules for public companies in Canada.

If the company is not a public company, you can ask the company directly for this information. If they are incorporated in Ontario, you can also check with the Ministry of Government and Consumer Services, for more details.

If you have more questions, contact the OSC Inquiries and Contact Centre.

Mar 12, 2018
Basics, Regulation and policy,

“Is HST charged on the sale of stocks?”

“Where can I get information about ‘smart beta’ ETFs and who are the largest sellers of ETFs in Canada?”

x

“Where can I get information about ‘smart beta’ ETFs and who are the largest sellers of ETFs in Canada?”

Dan K.

Thank you for your question to Re: Investing, Dan. We are not able to provide advice about specific products or companies.

You can go to resources such as Globefund or Morningstar to find out which exchange trade funds (ETFs) use “smart beta” (ETFs that use alternative index construction rules instead of the typical cap-weighted index strategy, in a transparent way) and you may also be able to use these resources to determine who are the largest sellers of ETFs in Canada. Our article about how to monitor ETF performance provides links to Globefund and Morningstar.

Learn more about the risks of ETFs and ETF Facts on our website. You may also find a registered financial advisor helpful in answering your questions about ETFs.

Mar 09, 2018
Products,

“When can someone start contributing to an RRSP?”

“I am 59 and retired with no income. Can I withdraw from my RRSP?”

x

“I am 59 and retired with no income. Can I withdraw from my RRSP?”

Sam

Thank you for your question Sam. We are not able to provide advice, but the information provided below can help you make an informed decision.

A withdrawal from a Registered Retirement Savings Plan (RRSP) is counted toward your income for the year and must be reported at tax time for that year. There is a withholding tax on the total amount of the withdrawal. The amount of the withholding tax depends on how much you withdraw. Learn more about making RRSP withdrawals before you retire.

You may also be interested in learning about Registered Retirement Income Funds (RRIFs). You won’t pay any tax on investment earnings when you convert your RRSP to a RRIF. Your money will continue to grow tax free as long as it stays in the RRIF. You only pay tax on the withdrawals you make. Learn more about how RRIFs work. Annuities are another option for creating retirement income.

Speak to a registered financial advisor or tax professional about your options and to decide what is right for you.

Mar 09, 2018
Products,

“I am divorced and I have never owned a home. Would I qualify for the Home Buyers’ Plan?”

x

“I am divorced and I have never owned a home. Would I qualify for the Home Buyers’ Plan?”

Catherine

Thank you for your question Catherine.

The Home Buyers’ Plan (HBP) is a federal government program that allows you to borrow up to $25,000 from your Registered Retirement Savings Plan (RRSP) tax free to fund your purchase. The money must have been in your RRSP for at last 90 days. In order to qualify, you must not have lived in a home owned by you or your spouse in the last 5 years. You must have entered into a written agreement to buy or build a home that you intend to occupy as your principal residence. This article provides information about government help for first-time home buyers.

The Canada Revenue Agency provides detailed information about the HBP. Speak to a registered financial advisor or tax professional for more information about the HBP and your options.

Mar 08, 2018
Products,

“Do I pay tax on the original invested amount on a mutual fund or just the income gained?”

x

“Do I pay tax on the original invested amount on a mutual fund or just the income gained?”

Cindy

Thank you for your question Cindy. The answer to your question depends on a number of factors.

There is information on our website on our website on how mutual funds work and also about how mutual funds are taxed:

If your mutual funds are held in a non-registered account, any money you make on them is subject to tax. Interest, dividends and capital gains are all treated differently for tax purposes.
If you hold your mutual funds in a registered plan, such as a Registered Retirement Savings Plan (RRSP), you won’t pay tax on the money you make as long as that money stays in the plan. When money is withdrawn from the plan, it will be taxed as income in the year of withdrawal.
With a Tax-Free Savings Account (TFSA), you don’t pay any tax on the money you make while it’s in the plan – or when you take it out.

You may also find useful information in this article about investors and tax.

Speak to a registered financial advisor or tax professional for more information about tax considerations with mutual fund investments.

Mar 08, 2018
Basics,

“If I redeem a mutual fund, will it affect the amount I receive from Canada Pension Plan income or Old Age Security?”

x

“If I redeem a mutual fund, will it affect the amount I receive from Canada Pension Plan income or Old Age Security?”

Cindy

Thank you for your question Cindy. We are not able to provide financial advice, but hope the resources below will provide helpful information about your question.

Both Canada Pension Plan (CPP) and Old Age Security (OAS) are retirement benefits offered by the federal government.

CPP payments are based on what you paid into the plan. OAS depends on your other income and how long you’ve lived in Canada. In order to determine if capital gains received from your mutual funds would affect your OAS, review information on the federal government’s website. Read our article about government benefits to learn more. Note that you must apply for these benefits, as you do not receive them automatically.

Speak to a registered financial advisor or tax professional for more information about how redeeming mutual funds may affect your government benefits.

Mar 08, 2018
Products,

“What is the rate for compounding interest for 5 years?”

“Is Coinbase considered a safe and legitimate platform to purchase cryptocurrency?”

x

“Is Coinbase considered a safe and legitimate platform to purchase cryptocurrency?”

Will B.

Coinbase is not currently regulated by the OSC. We cannot provide advice about their legitimacy. Here is general information about cryptocurrency trading platforms that may help you with your decision:
– Cryptocurrency trading platforms operate around the world, often with little regulation or oversight. Because of this, a platform user may be left with few remedies if they lose money on a particular platform as a result of a cryptocurrency transaction. The price of cryptocurrencies can be volatile and the cryptocurrency trading platforms can be vulnerable to cyberattack. You should be aware of these risks before using a cryptocurrency trading platform.
– Ensure you read the terms and conditions associated with any cryptocurrency trading platform. These terms may not be drafted in the best interest of the user. For example, there may be limits on your ability to exchange cryptocurrencies for Canadian dollars.
– It is hard to verify the information provided about the company through online forums. For example, there may be positive reviews drafted by employees, or other people paid by the service provider.
It is important to speak to a registered financial advisor, if you have any questions about cryptocurrencies. Learn about cryptocurrencies on our website. The OSC’s Inquiries and Contact Centre is also available to answer your questions.

Mar 05, 2018
Products,

“How do I find a low fee investment company?”

x

“How do I find a low fee investment company?”

Tony C.

Thank you for your question to Re:Investing!

Once you understand the type of service you require, you can shop around to compare fees.

These articles may help you make an informed decision about the type of advice you require:

7 types of advisors
How to buy and sell stocks includes information about full-service investment firms, discount brokerages and portfolio managers. You may also be interested in learning about online investment advisors
4 ways advisors are paid

When you pay a fee, you’re paying for the various services that your firm provides, which can be different depending on your firm or the type of account that you have.

Find out more about and visit Investment Performance and the Cost of Advice to help you understand how fees may affect investment performance. Make sure you check registration of the financial advisor you are considering using, before making an investment decision.

Mar 05, 2018
Basics,

“Are mortgage investment corporations a good investment choice?”

“I am thinking about making an investment in a company but it kind of sounds like a Ponzi scheme. How can I tell?”

x

“I am thinking about making an investment in a company but it kind of sounds like a Ponzi scheme. How can I tell?”

Anonymous

A Ponzi scheme typically recruits investors through ads and emails that promise high returns by joining a special group of investors. Often there is pressure to get in on the scheme quickly. Investors may see returns fairly early but those returns are paid from investors’ own money and money from new investors. The investment does not exist. When new people stop joining the scheme, there will be no money to pay you out and you lose the money you invested. The promoters vanish taking all the money with them. Read more about Ponzi schemes and other common investment scams.

One way to prevent being the victim of a Ponzi scheme is to make sure you check registration of the promoters before making an investment. Learn about 4 signs of investment fraud, how you might be approached and 4 ways to avoid investment scams.

If you feel you have been a victim of an investment scam, contact the OSC Inquiries & Contact Centre for more information.

Feb 28, 2018
Frauds and scams,

“I was referred to an investment for members of my community group that promises 10% interest. How do I know it’s legitimate?”

x

“I was referred to an investment for members of my community group that promises 10% interest. How do I know it’s legitimate?”

Anonymous

Thank you for contacting Re:Investing! It is great that you are taking steps to find out more about this individual before making an investment.

Before making an investment decision, you should check their registration at CheckBeforeYouInvest.ca.

Since you mentioned that this investing opportunity was being offered to your community group, you may find information in this article about affinity fraud helpful. This is a form of investment fraud in which fraudsters approach potential victims through a group or community organization they belong to and whose trust they have gained.

One of the 4 signs of fraud is offering a big return for little risk. Here are 4 ways to avoid investment scams.

You can also contact the OSC Inquiries & Contact Centre for more information.

Feb 28, 2018
Frauds and scams,

“I am wondering how real estate investments are regulated in Ontario?”

x

“I am wondering how real estate investments are regulated in Ontario?”

Anonymous

Thank you for your inquiry Re:Investing.

There are various ways to invest in real estate related investments that may involve securities, including, for example:

Real estate investment trusts
Limited partnerships
Mortgage investment entities
Syndicated mortgages

The first three types of investments listed above are regulated by the Ontario Securities Commission. Syndicated mortgages are regulated by the Financial Services Commission of Ontario.

The differences between these investments, and how they are regulated, are described in this article: https://www.getsmarteraboutmoney.ca/investing-in-real-estate/
I encourage you to review this document. If you have any follow-up questions, you are welcome to contact us again. You can also contact the OSC Inquiries & Contact Centre for more information.

Feb 28, 2018
Products,

“I received an unsolicited email encouraging me to invest. Could you let me know if this is a “legitimate company”?

x

“I received an unsolicited email encouraging me to invest. Could you let me know if this is a “legitimate company”?

Anonymous

Thank you for your question to Re:Investing! It is great that you are taking the steps to find out more about a company you are planning on making an investment with. We are not able to confirm whether a company is legitimate, however, we can provide you with information to help you make an informed decision.

Before making an investing decision, you should make sure you check registration of the person or company offering the investment at CheckBeforeYouInvest.ca. Also, check if they are a public company and file disclosure documents on the System for Electronic Document Analysis & Retrieval (SEDAR) at www.sedar.com. Learn more about where to get information on a company.

Learn about:

You can also contact the OSC Inquiries & Contact Centre for more information.

Feb 28, 2018
Frauds and scams,

“I would like to invest in Forex. How can I find a company offering Forex trading in Ontario?”

x

“I would like to invest in Forex. How can I find a company offering Forex trading in Ontario?”

Anonymous

Companies engaging in the business of forex trading (if the investments are securities) are required to be registered as investment dealers. Investment dealers are required to be members of the Investment Industry Regulatory Organization of Canada (IIROC).

You may wish to review the list of Member Dealers on IIROC’s website (www.iiroc.ca) and contact some of the dealers listed to see if they trade in forex. The list of Member Dealers is available at: http://www.iiroc.ca/industry/Pages/Dealers-We-Regulate.aspx.

There is information on the Canadian Securities Administrators (CSA) website about risks of trading in forex.

You can also read about fraudulent forex schemes and other common investment scams in this article.

You can also contact the OSC Inquiries & Contact Centre for more information.

Feb 28, 2018
Frauds and scams,

“The company I invest in will not provide financial statements. What can I do?”

“Is it better to have a mix of mutual funds and GICs for retirement? Or just mutual funds?”

x

“Is it better to have a mix of mutual funds and GICs for retirement? Or just mutual funds?”

Anne H.

Thank you for your question to Re:Investing. Diversification is a way to try to reduce the risk of your portfolio by choosing a mix of investments. The key to diversification is to not put everyone in one investment. Your overall investment portfolio should match your risk tolerance, but each investment may have different characteristics, to minimize overall risk.

Mutual funds can provide built-in diversification. Here are four reasons investors may decide to choose mutual funds. Guaranteed investment certificates (GICs) are considered one of the safest ways to invest and often form part of an investor’s portfolio. Learn more about GIC basics and risks of GICs.

We are not able to provide specific advice about your personal investments. In order to help you make informed investment decisions, we are providing unbiased resources and information.

Speak to a registered financial advisor or tax professional for advice about the options that work best for your investment plan.

Feb 26, 2018
Products,

“When I take money out of my RRSP to buy an annuity, do I pay tax at source?”

“I am on disability. Can I withdraw funds from my RRSP tax-free?”

x

“I am on disability. Can I withdraw funds from my RRSP tax-free?”

Thomas G.

Thank you for your question Thomas.

When you withdraw from your Registered Retirement Savings Plan (RRSP), your financial institution will hold back the tax on the amount you take out and pay it directly to the government on your behalf. There are a couple exceptions, including the Home Buyer’s Plan and the Lifelong Learning Plan. You have to report the amount you take out on your tax return as income. At that time, you may have to pay more tax on the money — on top of the withholding tax. It depends on your total income and tax situation. Learn more about the rules and consequences of taking money out of your RRSP.

You can speak to a registered financial advisor or tax professional for advice.

Feb 26, 2018
Life events, Products,

“Can I transfer my RRSP account to my spouse’s RRSP account?”

“If I own more than one RRIF, do I need to make minimum withdrawals from all accounts or just one?”

“What is involved in converting an RRSP to a RRIF?”

“If I withdraw money from my RRSP and withdraw money from a RRIF at the same time are they linked for withholding tax?”

x

“If I withdraw money from my RRSP and withdraw money from a RRIF at the same time are they linked for withholding tax?”

Miles H.

If you are under 71, and have both a Registered Retirement Savings Plan (RRSP) and a Registered Retirement Income Fund (RRIF), you will pay tax on the withdrawals from the RRSP and separate taxes excess amounts over the minimum withdrawals from your RRIF.

The current tax rates on RRSP withdrawals are between 10% and 30% depending on how much you take out. Find out more about RRSP withdrawals.

You can open a RRIF anytime, but no later than the end of the year you turn 71. You have to start withdrawing money from your RRIF in the year after you open it, based on a percentage of the value of your RRIF. The percentages based on age are listed in this article about withdrawals from your RRIF.

Speak to your registered financial advisor or a tax professional to learn more about the tax implications of withdrawing from your RRSP and/or RRIF.

Feb 21, 2018
Products,

“I am 45. I put my pension into a RRIF — is it tax deductible? Should I have put my pension into an RRSP?”

x

“I am 45. I put my pension into a RRIF — is it tax deductible? Should I have put my pension into an RRSP?”

Shauna

As your question is unique to your situation, we recommend speaking to a registered financial advisor or tax professional. In terms of Registered Retirement Savings Plan (RRSPs) and Registered Retirement Income Fund (RRIFs), here is some information that may help:
RRIFs:

A RRIF can be opened at any time, but no later than the end of the year you turn 71.
You do not pay tax on the money in your RRIF, as long as it stays in the plan.
You pay tax on the money you withdraw from your RRIF. You have to start withdrawing money from your RRIF in the year after you open it.
Typically you open a RRIF by transferring money from an RRSP. Transfers from other registered plans such as pension plans and deferred profit sharing plans (DPSPs) are allowed under certain circumstances.

RRSPs:

An RRSP is typically used to save money for retirement and has tax advantages.
You pay a withholding tax on the amount you take out of your RRSP
You must close your RRSP in the year you turn 71.

Feb 21, 2018
Products,

“Can a LIRA be included in a self-directed account?”

x

“Can a LIRA be included in a self-directed account?”

Mike

Typically, you can select the investments in your locked-in retirement account (LIRA), but there may be some restrictions. A LIRA is an account that holds money moved out of a pension plan. You may use one if you are changing companies and can take your pension savings with you. It works like a Registered Retirement Savings Plan (RRSP), but your money is locked in. You cannot withdraw the funds until you retire.

Be careful if people are contacting you to withdraw money from a LIRA. This is a common type of pension scam which you can read more about in this article.

If you are moving money from a defined contribution pension plan, learn more about options when leaving a defined contribution pension plan before retirement.

You should speak to your registered financial advisor to find out more about options for a LIRA.

Feb 21, 2018
Products,

“How can I buy small stock and cryptocurrencies?”

x

“How can I buy small stock and cryptocurrencies?”

Jonathan

You can purchase stock from a registered investment firm or through a registered financial advisor. This article on how to buy and sell stocks will provide you with a starting point on how to invest in stocks. Make sure you have a plan and understand risk.

Before you purchase cryptocurrencies, read our article on cryptocurrency basics and make sure you understand how they work and the risks associated with them. Some cryptocurrencies may be subject to securities regulation. You can also learn about cryptocurrency offerings such as initial token offerings.

If you go to an advisor, make sure they are registered. You can contact the OSC Inquiries and Contact Centre as they are available to answer your questions about finding a registered financial advisor and also about securities regulation of cryptocurrencies.

Feb 21, 2018
Products,

“How do I transfer $12,000 from my TFSA to an RRSP account and get the biggest tax return?”

x

“How do I transfer $12,000 from my TFSA to an RRSP account and get the biggest tax return?”

Alyssa

It is possible to withdraw money from a Tax-Free Savings Account (TFSA) and then make contributions to a Registered Retirement Savings Plan (RRSP). Before you do, make sure you understand the process and any tax implications.
You can take money out of your TFSA at any time, without paying tax on the withdrawal. Taking money out can affect your TFSA contribution room for the year. Make sure you understand how transfers work. If you are withdrawing investments, such as stocks or bonds, you’ll pay 100% tax on any gains made by swapping investments between your TFSA and a registered account. Here is information about TFSA basics.

There are limits on how much you contribute each year to your own RRSP and your spouse’s RRSP. Your total contribution room for the year is the lower of: 18% of your earned income for the previous year, OR the maximum contribution amount for the current tax year: $26,010 for 2017. Find out more about RRSP contributions. If you decide to open an RRSP, make sure you understand what happens when you withdraw from your RRSP before you retire.
Speak to a registered financial advisor or tax professional for advice about the options that work best for your investment plan.

Feb 21, 2018
Products,

“Are there advantages with using a direct investing account to purchase mutual funds?”

x

“Are there advantages with using a direct investing account to purchase mutual funds?”

Doug

We cannot tell you which is the right option for you but we can provide information to help you make your choice.

A direct investing account, or discount broker account, is provided by a registered investment dealer firm, and usually does not provide an advisor to help you choose your investments.

In order to use a direct investing account effectively, you must have a good idea about your personal investing plan. You should have time to monitor and manage your investments and research your investments regularly. If you are purchasing mutual funds, understand how Fund Facts work and also how fees and compensation affect your investments.

If you are not sure whether you will be able to manage your investments regularly and effectively, you may wish to work with an advisor. Here are 3 reasons to work with an advisor. If you decide to use an advisor, understand what to expect. Before you work with an advisor, visit CheckBeforeYouInvest.ca to learn how to check their registration.

Feb 21, 2018
Products, Services,

“Can I switch my RRSPs to a RRIF at 64?”

“Do you pay interest or tax when you sell a bond?”

“Where should I invest to get a good rate of return?”

x

“Where should I invest to get a good rate of return?”

Susan M.

We cannot provide investment advice, such as where to invest, or specific products to choose, as every individual’s investing needs/goals are different. We can provide you with unbiased resources and information to help you make an informed investing decision.

Generally, the higher the potential return of an investment, the higher the risk. Before deciding which investments are best for you, make a plan and understand the risk-return relationship. Your asset mix will largely determine the risk and expected return of your portfolio. Here is a table that explains risk/return by asset.

As an example of a way you can compare returns, using mutual funds as an example, look at the mutual fund’s Fund Facts to help you understand their performance history and risk rating and costs associated with owning it.

Speak to a registered financial advisor to help you choose the best investments for your investing needs.

Feb 21, 2018
Basics,

“What is the difference between an RRSP, TFSA or non-registered investment account?”

x

“What is the difference between an RRSP, TFSA or non-registered investment account?”

Aditya

Both Registered Retirement Savings Plans (RRSP) and Tax-Free Savings Accounts (TFSA) offer tax advantages to help you reach your savings goals. The main differences are:

An RRSP is usually used for retirement savings. A TFSA can be for any type of savings goal.
Your RRSP contributions are tax deductible. TFSA contributions are not. You need earned income to contribute to an RRSP but not to a TFSA.
You pay tax on your RRSP withdrawals because you contribute with pre-tax dollars. TFSA withdrawals are tax free because you made the contributions with after-tax dollars.
You must close your RRSP the year you turn 71. At that time, you have to use your savings to buy either a RRIF or an annuity. With a TFSA, you don’t have to stop contributing, or close it, at a certain age.

Non-registered investment accounts have no special “tax status”. All investments held in non-registered accounts are subject to tax. Find out more about investors and tax. Speak to your registered financial advisor or tax professional about your options.

Feb 21, 2018
Products,

“How do I change my RRIF withdrawals from yearly to monthly?”

“Can I have more than one TFSA account – with one of them through my employer?”

x

“Can I have more than one TFSA account – with one of them through my employer?”

Sujata B.

You can set up multiple Tax-Free Savings Accounts (TFSA), but you cannot contribute more than your annual contribution limit to all of them combined.

The maximum annual contribution limit for 2018 is $5,500. If you have not contributed the maximum in past years, or have made withdrawals in previous years, you may have additional contribution room available. Generally, your TFSA contribution room is made up of the TFSA dollar limit for the year, any unused TFSA contribution room from the previous years, and any withdrawals made from the TFSA in the previous year. You can check your contribution room through the Canada Revenue Agency’s My Account service.

You can also read about making transfers between TFSAs in this article about TFSA basics.

Also, you can learn5 more about contribution rules through the CRA website.

You may also want to speak to a tax professional about your options for TFSA account contributions.

Feb 21, 2018
Products,

“What is a pension plan?”

x

“What is a pension plan?”

Anonymous

A pension plan, can provide a steady income after you retire – either by paying a fixed amount for life or helping you save money while you are working. There are government, employer and individual pension plans. The Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) gives a monthly income starting as early as your 60th birthday. There are two main types of employer pension plans:
1. Defined benefit (DB) plan
– Pays a certain amount of retirement income for life which is based on a formula that includes your earnings and years of service with your employer
– Typically, both you and your employer contribute. Your employer is responsible for investing the contributions to ensure there’s enough money to pay the future pensions of all plan members.

2. Defined contribution plan
– Contributions are guaranteed, but retirement income is not. Usually, both you and your employer contribute to the plan. Your employer may match some contributions you make
– You are responsible for directing investing all contributions to grow your savings. In this way, it is similar to a Registered Retirement Savings Plan (RRSP) and retirement funds depend on total contributions and returns on investments.
Find out more about pensions and ways you can plan for retirement.

Feb 20, 2018
Products,

“I have a trading account and don’t get monthly statements. What are the rules regarding statements?”

“Are Bitcoin and other cryptocurrencies fraudulent?”

x

“Are Bitcoin and other cryptocurrencies fraudulent?”

Ruby

Cryptocurrencies are digital currencies that are not issued or backed by a central bank or monetary authority and in many cases, have not been subject to traditional financial sector regulations. Cryptocurrencies are risky, because they are volatile, lack oversight, and are vulnerable to hacking. Some fraudsters have tried to capitalize on market interest in cryptocurrencies by creating new scams or rebranding existing scams.

There are businesses looking to raise money by issuing coins or tokens offerings known as initial coin offerings (ICOs) or initial token offerings (ITOs). ICOs and ITOs may be subject to securities regulation. Learn more about cryptocurrency offerings.

Before you consider purchasing a cryptocurrency, make sure you understand how they work and the risks involved. To learn more about cryptocurrency visit GetSmarterAboutMoney.ca or contact the OSC’s Inquiries and Contact Centre.

Feb 12, 2018
Products,

“If I put a name, “Robert Smith”, in the CSA National Registration Search, how would I know if it’s the right Robert Smith?”

x

“If I put a name, “Robert Smith”, in the CSA National Registration Search, how would I know if it’s the right Robert Smith?”

Charlie

When you enter a name in the CSA National Registration Search, the initial listing will show you results for all individuals with the name “Robert Smith”. Some listings may also include a middle name.

You can confirm if it is the same Robert Smith a number of ways. Individual listings for each “Robert Smith” will provide information on other or previous names of the individual, the name and address of the firm they work for, the province(s) they are registered in, and the registration categories they fall under. Another option is to contact the OSC Inquiries and Contact Centre at 1-877-785-1555 to see if there is public information available to match the individual.

Feb 12, 2018
Basics,

“Do you have statistics on the number of people that have been charged for ponzi schemes?”

“Are trailing fees tax deductible?”

“How do I transfer investments from my RRIF to my TFSA?”

“How do I move stocks into a TFSA? Who sets up and holds a TFSA with my stocks in it? I want to retain the stocks.”

“Can you name spouse as “successor annuitant” for an RRSP, like for RRIF?”

“Is it justified for a mutual fund’s MER to be 2.5%, if net return is 10%?”

“Is RRSP contribution room cumulative from one year to another, so if I didn’t contribute one year, I can contribute the next?”

“How much can I withdraw from my RRSPs without paying withholding tax?”

x

“How much can I withdraw from my RRSPs without paying withholding tax?”

Rosalee M.

If you are withdrawing funds from an RRSP, you will pay tax immediately on withdrawal, and possibly more when you file your income tax return.

For example, if you take out $20,000 from your RRSP this year, after the 30% withholding ($6,000) is applied, you end up with $14,000. You will have to report this amount on your tax return as income. You may have to pay more tax on your income depending on your tax brackets.

Here is more information about the amount you pay with a RRSP withdrawal and a link to the information on the CRA’s website.

If you transfer between RRSPs, tax will not be withheld.

Speak to your registered financial advisor or a tax professional about the tax consequences of RRSP withdrawals.

Feb 09, 2018
Products,

“Is there a difference between an RRSP and a RRIF?”

“When do I take money out of my RRIF when I turn 71?”

“How much money should I invest as a start up in REITs? Can you recommend a company?”

“How much should I contribute to my RRSP?”

x

“How much should I contribute to my RRSP?”

Brian G.

Thanks for your question Brian. The right amount to invest in an RRSP varies for each individual based on their financial plan. To start, read How much you need to save for retirement to learn about such factors as: age, lifestyle, federal government benefits. It is also useful to know how to choose your asset mix.

Find out how much contribution room you have available. Your contribution room for the year is the lower of:

18% of your earned income for the previous year, or
the maximum contribution amount for the current tax year: $25,010 for 2017.

You may wish to speak to a registered financial advisor for more information and to have a financial plan that meets your individual scenario.

Learn more about creating your plan and RRSPs.

Feb 09, 2018
Products,

“Can I take my CPP benefits at 60 and invest them?”

“What are ACBs? How are they calculated? Where can one obtain information on a specific stock’s ACB?”

“Who gets to decide where the monthly withdrawal comes from in my self-directed RRIF? Is it subject to commission?”

x

“Who gets to decide where the monthly withdrawal comes from in my self-directed RRIF? Is it subject to commission?”

Sue M.

When you open a Registered Retirement Income Fund (RRIF) your application form or RRIF contract may outline how monthly withdrawals will be made. If you do not have a copy of the application form or contract, speak to the compliance department of the institution or registered firm where you opened your RRIF. They should be able to provide you with a copy and answer your questions.

Fees and commissions you may pay will depend on the types of products you have in your RRIF. You should have disclosure about these fees and commissions from when you made your initial purchases. You can also speak to the institution or registered firm where your account is held, if you do not know where to find this disclosure.

Learn more about opening a RRIF and RRIF withdrawals.

Feb 01, 2018
Products,

“If I sell a stock in my self-directed RRSP, do I have to pay the taxes upfront using money from my self-directed RRSP?”

x

“If I sell a stock in my self-directed RRSP, do I have to pay the taxes upfront using money from my self-directed RRSP?”

Steve

If you are selling the stock and leaving the proceeds inside your RRSP, you do not need to pay tax.

If you plan to withdraw the proceeds, you will pay a withholding tax. Your financial institution will hold back the tax on the amount you take out and pay it directly to the government. The amount depends on how much you take out and where you live. You also have to report the amount you take out on your tax return as income. At that time, you may have to pay more tax on the money — on top of the withholding tax. It depends on your total income and tax situation.

Learn more about making RRSP withdrawals before you retire and see the withholding tax rates. Speak to a registered financial advisor to learn more about making withdrawals from an RRSP.

Feb 01, 2018
Products,

“I turn 70 this year. What tax would I pay if I made a $10,000 withdrawal from my RRSP? Would it be better to convert it to a RRIF now?”

x

“I turn 70 this year. What tax would I pay if I made a $10,000 withdrawal from my RRSP? Would it be better to convert it to a RRIF now?”

Sheila B.

Regardless of whether a withdrawal is from a Registered Retirement Savings Plan (RRSP) or a Registered Retirement Income Fund (RRIF), the amount of the withdrawal is counted toward your income for the year and must be reported at tax time.

The difference may be in the withholding taxes. For RRSPs, there is a withholding tax on the total amount of the withdrawal. The amount of the withholding tax depends on how much you withdraw. Learn more about making RRSP withdrawals before you retire.

With a RRIF, you pay a withholding tax on the amount of the withdrawal above your minimum annual withdrawal. Learn more about making withdrawals from a RRIF.

Depending on your total annual income, you may pay additional tax at tax time in addition to the withholding tax. We are not able to provide advice such as whether you should convert your RRSP to a RRIF as this decision depends on many individual factors. Speak to a registered financial advisor or tax professional about your options and to decide what is right for you.

Feb 01, 2018
Products,