Investing and the investment world can be complex. Re: Investing offers clear, unbiased answers to your questions on investing, from a trusted source.
Investir peut être complexe. Et le monde de l’investissement aussi. Le site Re : Investir est une source d’information fiable qui offre des réponses claires et objectives à vos questions sur l’investissement.
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:
You can invest money through an advisor at your bank or financial institution, through a registered financial advisor or an online investment advisor.
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.
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.
Leah
You can close your Registered Retirement Savings Plans (RRSP) and take cash (as long as the investments are liquid) before you retire. However, you should consider that you will pay an immediate withholding tax on the money you take out (10-30% depending on amount withdrawn), and possibly more at tax time (the amount taken out must be reported as income on your tax return).
An RRSP must be closed by the year you turn 71. Making RRSP withdrawals before you retire provides a quick look at the impact of dipping into your RRSP before retirement.
Speak to a financial representative to understand whether closing your RRSP is the best option for you or if there are other options you can consider.
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.
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.
Dave W.
A non-spouse beneficiary of a Registered Retirement Savings Plan (RRSP) will be subject to tax. The entire value of the RRSP must be included in the final tax filing of the deceased person and reported as income. Who pays this tax – the beneficiary or the estate – depends on different factors. Generally, the beneficiary will receive their share of the RRSP after taxes.
Speak to a tax expert to ensure you understand the implications in addition to speaking with a financial representative.
Wendy C.
If you have an existing mortgage where you are the co-signer, you will need to show the lender that you qualify for another mortgage. There are many factors to consider with respect to getting a mortgage approved. Before you consider a new mortgage, you may need to update your overall financial plan, investment strategy and will, among other things.
If you are planning to buy another home, first speak with a lawyer in addition to speaking to a financial representative about your financial situation.
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:
Speak to a financial representative for advice about the affect a new product might have about a specific company.
Dave
Series F units of mutual funds tend to be available only through a financial representative, often through a fee-based account where you pay a single annual fee for services. Typically advisors who offer this type of service are registered in the category of “Portfolio Manager”.
Here is more information about different mutual fund fees and characteristics of different fund series. You may also be interested to learn more about ways advisors are paid. Make sure to always check the registration of any individual or firm you invest your money with. You can check registration by visiting our website CheckBeforeYouInvest.ca.
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.
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.
Sai
If the company is a public company (reporting issuer) in Canada, information about the merger will typically be on the System for Electronic Document Analysis & Retrieval (SEDAR) at www.sedar.com.
There may be a Management Information Circular filed that explains what will happen to securities (like stocks) held by investors, as a result of the transaction, if the transaction is approved.
If you have questions about a particular merger, you can call the OSC’s Inquiries & Contact Centre.
Bernie
No. As long as your money remains inside your Registered Retirement Income Fund (RRIF), you do not need to pay any tax on returns, whether in the form of interest, dividends or capital gains.
Speak to a financial representative for additional information when buying and selling investments. You can learn more about investing and taxes on GetSmarterAboutMoney.ca.
Wolston
Foreign interest income must be reported in Canadian dollars when you submit your taxes. The Canada Revenue Agency (CRA) sets and enforces rules related to foreign income.
Learn more about foreign interest from the CRA.
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:
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.
Michelle
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. Risk needs to be considered at all investing stages and for different goals. Use these charts to see the risk-reward trade-off of different types of investments.
A common sign of investment fraud is being offered high returns for little or no risk. If you are offered an investment with these common types of fraud contact the OSC’s Inquiries and Contact Centre.
Before you work with a firm or financial representative, check that they are registered to provide the service or sell the products they are offering.
Kevin D.
There is no direct way to transfer funds between a Registered Retirement Savings Plan (RRSP) and a Registered Education Savings Plan (RESP). If you use funds from an RRSP to add to an RESP, you must first withdraw the money, which will have tax consequences. In addition, you will permanently lose the original contribution room you used to contribute to your RRSP.
Learn more about contributing to an RESP.
Speak to a financial representative or tax professional for advice about the options that work best for your investment plan. You can also learn more about RESPs from Employment and Social Development Canada.
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.
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.
Carol
A Deferred Profit Sharing Plan (DPSP) is set up by your employer to help you save for retirement. You don’t make contributions – the company does, from a portion of its profits.
When you leave your employer, your DPSP money can be transferred to an RRSP or RRIF, used to buy an annuity, or taken in cash (it will be taxed as income in the year you receive it).
Because companies often combine a DPSP with a pension plan or Group RRSP to provide retirement income for employees, speak to your employer to learn more about your plan rules.
Kent
Investment fund companies (that are reporting issuers) must disclose certain information for each portfolio asset held or sold short. You may check the System for Electronic Document Analysis and Retrieval (SEDAR) for fund financial statements.
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.
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.
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:
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.
Dean M.
Your Registered Retirement Savings Plan (RRSP) contribution is deducted from your total income for the year. Even if you have separate sources of income, your “taxable income” for the year is the total of all your income combined.
Your RRSP deduction limit is based on your earned income and any unused contribution room you have carried forward from previous years. Learn more about making RRSP contributions on GetSmarterAboutMoney.ca.
Speak to a financial representative or tax professional to learn more about contributing to an RRSP and to learn about other deductions and credits that may be available to you.
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.
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.
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.
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.
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.
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.
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.
Michaela
Pension plans work differently depending on how they are set up – as defined contribution, or defined benefit – and the amount you receive depends on many factors, including how long you have been part of the plan and how much has been contributed by you and on your behalf.
Read your pension plan statements and speak to your plan provider to understand how your retirement income is calculated and what you may receive. Learn about defined benefit plan retirement income, and options for income if you have a defined contribution plan.
Michael R.
If you are ready to convert your Locked-in Retirement Account (LIRA) to a Locked-in Retirement Income Fund (LRIF), speak to a financial representative as you consider your options.
In Ontario, LIRAs and LRIFs are regulated by the Financial Services Commission of Ontario (FSCO). You can learn about pension unlocking on FSCO’s website, and read their guides on locked-in accounts for more information.
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.
Gary S.
You can grow the money you save by investing it to earn a return. You can make your money grow faster if you also invest the money you earn (your return) along with the money you started out with. This is called compounding. Compounding works for both guaranteed and non-guaranteed investments.
Read “Growing your savings with compound interest” for detailed information about how compounding works for both guaranteed investments and non-guaranteed investments, and examples of how your savings can grow.
Use GetSmarterAboutMoney.ca’s Compound Interest Calculator to see how even small amounts add up over time.
Brigitte
The Canada Revenue Agency provides information on qualified investments in registered accounts, including Tax-Free Savings Accounts (TFSAs) on its website.
While it may be possible to buy an annuity and hold it in an TFSA, consider that you cannot contribute more than your allowable contribution room – learn how to check contribution room in this previous Re: Investing question. Speak to a financial representative to learn more about holding an annuity in a TFSA and to decide whether an annuity is right for you, and to understand TFSA rules related to contributions and withdrawals when you own an annuity.
Alex
Rules around annual contributions to a Group Registered Retirement Savings Plan (RRSP) are the same as for an individual RRSP. Your total contribution room for the year is the lower of:
If you are a member of a pension plan in addition to the Group RRSP, your pension adjustment will reduce the amount you can contribute to your RRSP. Speak to a financial representative or tax professional to understand how your plan works and to determine your annual contribution limit.
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.
Samir
Similar to how Tax-Free Savings Accounts (TFSAs) work, if you don’t have the money to contribute to your Registered Retirement Savings Plan (RRSP) in any given year, you can carry forward your RRSP contribution room and use it in the future. The amount of RRSP contribution room is based on earned income, up to certain limits. Learn more about how RRSPs work.
Unlike TFSAs, if you withdraw from an RRSP (except when using government programs like the Home Buyers’ Plan or Lifelong Learning Plan), you will permanently lose the contribution room. Learn more about making withdrawals from an RRSP before you retire.
Radhakrishnan G.
When you are looking for an advisor, first consider the services you are looking for – this will help you determine the type of advisor you need. Learn about different types of advisors on GetSmarterAboutMoney.ca. When you find an advisor you think you want to work with, ask them these eight questions.
Here are some resources to help you find an advisor:
Always check the registration of any person or business trying to sell you an investment or give you investment advice. Learn more about registration and how to check an advisor’s registration, and contact the OSC’s Inquiries & Contact Centre if you have questions.
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.
Maricel
A Deferred Profit Sharing Plan (DPSP) is set up by your employer to help you save for retirement. You don’t make contributions – the company does, from a portion of its profits.
Speak to your employer to understand how withdrawals are handled – you may not be able to make withdrawals while you are still employed. If allowed, any withdrawals will be fully taxed as income.
When you leave your employer, your DPSP money can be transferred to an RRSP or RRIF, used to buy an annuity, or taken in cash (it will be taxed as income in the year you receive it). Learn more about DPSPs on GetSmarterAboutMoney.ca.
Jenny
Employers may calculate tax deductions differently depending on the method they use. Speak to your employer to understand the deductions on your paycheque.
Employees have the option to request their employer take additional tax from their pay. Learn more about increasing income tax deductions from the Canada Revenue Agency and learn more about understanding the tax deductions on your pay stub on GetSmarterAboutMoney.ca.
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.
Wendy
A Tax-Free Savings Account (TFSA) can hold a variety of investments, like GICs, mutual funds, ETFs and individual stocks. Learn more about how TFSAs work.
Many of the same financial institutions that offer TFSAs will offer options for stocks, however stocks may be offered in a separate investment branch of the institution. Learn more about buying and selling stocks.
Speak to your TFSA provider or a financial advisor to learn your options.
Sorin I.
Fees associated with your Registered Retirement Income Fund (RRIF) vary depending on:
Contact your financial institution to understand the fees you will pay, and learn more about RRIF fees on GetSmarterAboutMoney.ca.
If you are withdrawing more than the minimum annual withdrawal, you will pay withholding tax on the excess amount. The tax rate depends on the amount in excess of the minimum amount withdrawn. Learn more about making withdrawals from your 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.
Serge B.
The “indicative net asset value” – iNav or intraday NAV – is calculated a few times a minute and is generally available from the exchange where the ETF trades, or from the brokerage where you buy and sell ETFs.
The indicative net asset value is not a true measure of the NAV, however it may be used to estimate the value of and ETF throughout the day. Speak to a financial advisor to understand how you may use the iNav.
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:
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.
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.
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.
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:
Ken A.
If you are referring to a $1,000 increase in the value of your stocks, the answer is, in short, no. That profit is not realized until you sell the stock, meaning you cannot reinvest it. Learn more about how stocks work.
However, if you are referring to a distribution, like a dividend, you can arrange to have dividends reinvested through a dividend reinvestment plan (DRIP). A DRIP is the automatic reinvestment of shareholder dividends in more shares of the company’s stock.
Speak to a financial advisor to learn more about dividend reinvestment plans.
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.
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.
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.
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.
A. C.
No, a Tax-Free Savings Account (TFSA) can only be set up and held individually. You also cannot contribute directly to your spouse’s TFSA.
Speak to a financial advisor to learn more about setting up a TFSA and to understand your contribution limits. Learn more about TFSAs on GetSmarterAboutMoney.ca.
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.
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.
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.
Saurabh
The types of investments that can be held in registered savings plans – like Tax-Free Savings Accounts (TFSAs) – can be found on the Canada Revenue Agency’s website.
There are no limits on the percentage of foreign investments that can be held inside a TFSA, however you may be subject to foreign tax depending on the investment’s originating country. You may also trigger a tax event when you transfer the investments. Learn more by reading this previous Re: Investing question.
Speak to a financial advisor or tax professional to confirm whether you can hold the investment in your TFSA, and to learn about any tax you may be liable to pay.
Walter G.
There is no set-up fee for most RRIFs, but you may pay other fees once you open a plan. These fees may include an annual administrative or trustee fee, investment fees and fees for making changes to your RRIF. Fees vary depending on:
Speak to a financial advisor and both financial institutions to understand the fees you may pay to transfer your RRIF. Learn more about RRIF fees.
Tim D.
Capital gains are taxable in the year they are realized. You pay tax on 50% − or half − of a capital gain. Learn more about calculating and reporting your capital gains and losses from the Canada Revenue Agency.
You may be able to reduce the amount of tax that you pay by contributing to your RRSP in the same year. You must have contribution room available.
We are not able to provide advice. Speak to a financial advisor or tax professional to learn how to maximize the use of the proceeds from your capital gain to make an RRSP contribution.
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:
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.
Roger B.
Under certain circumstances, it may be possible to transfer an excess amount – above the minimum RRIF withdrawal – from a RRIF back to an RRSP. You must be under the age of 71. By the end of the year you turn 71, you must close your RRSP. Learn more about transferring excess amounts from a RRIF on the Canada Revenue Agency’s website.
We are not able to provide advice. Discuss this type of transfer with your financial advisor to see if you qualify.
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.
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.
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.
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.
Bruce
Canada Pension Plan (CPP) payments are fully taxable as income. You can request that federal taxes be deducted from your payments by completing the form Request for Voluntary Federal Income Tax Deductions form (ISP 3520). Speak to your financial advisor or tax professional to determine an appropriate amount for deduction based on your personal financial situation.
Learn more about CPP administration from Service Canada. Learn more about government benefits on GetSmarterAboutMoney.ca.
Rob B.
Locked-in Retirement Accounts (LIRAs) are intended to provide income in retirement, and generally must remain “locked-in”. However, in some instances, funds can be withdrawn in cases of financial hardship, or other circumstances. In Ontario, the Financial Services Commission of Ontario (FSCO) regulates pensions and LIRAs. You can learn more about the rules surrounding LIRAs on FSCO’s website.
Speak to a financial advisor about your options when purchasing a home – for example, using the RRSP Home Buyers’ Plan. For more information about LIRAs, contact FSCO.
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.
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.
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.
James W.
Certain types of income may be eligible for income splitting, depending on the source and your age. Generally this can only be done if you are over the age of 65. Income from Registered Retirement Income Funds (RRIFs) and some other sources of pension income qualify. Only 50% of eligible pension income can be transferred to a qualifying spouse or common-law partner.
The Canada Revenue Agency (CRA) has information on pension income splitting. Speak to your financial advisor to learn more about pension income splitting and to determine whether you qualify.
Isabel
If your savings are in a Tax-Free Savings Account (TFSA), you are not taxed while the funds are in the account, or when you decide to withdraw them.
Consider how you plan to use your account. If you are using the account as a regular savings plan, where you may make contributions or withdrawals regularly, read and understand how TFSA rules and penalties for over-contributions work. If you are planning to make frequent withdrawals and contributions, speak to an advisor to determine whether a TFSA is right for you.
Learn more about TFSAs on GetSmarterAboutMoney.ca.
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.
Flo
You do not have to sell your stocks when you close your Registered Retirement Savings Plan (RRSP). If you decide to close your RRSP and convert it to a Registered Retirement Income Fund (RRIF), you can transfer your existing investments. Similar to a self-directed RRSP, you can choose to open a self-directed RRIF and continue managing your own investments. Learn more about how RRIFs work.
Speak to a financial advisor to learn more about making this change. Learn more about your options when closing an RRSP, and opening a RRIF.
Faye S.
If the beneficiary of a Registered Education Savings Plan (RESP) does not attend an eligible program, you have options when closing the plan. But there may be financial costs and tax consequences. Here are four options:
Depending on what type of plan you have (individual, family or group RESP), your options may vary. Speak to your plan provider or a tax professional to learn more before you take action. Learn more about what happens if your child doesn’t continue their education.
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.
D
You can set up multiple Tax-Free Savings Accounts (TFSAs), however, keep in mind that the annual TFSA contribution limit is a single contribution limit for an individual. If you set up multiple TFSAs, you cannot contribute more than your annual contribution limit to all of them combined.
For example, the maximum annual contribution limit for 2018 is $5,500. If you have two TFSA accounts and you would like to equally contribute to them, you can contribute $2,750 to each of them to max out your 2017 contributions.
The Canada Revenue Agency (CRA) sets and enforces TFSA rules, including penalties for over-contributions. Read this previous Re: Investing question to learn how to check your available TFSA contribution room.
B.
Generally, interest rates for GICs are quoted on an annualized basis. However, you can confirm this with the financial institution where you are purchasing the GIC, and by reading any terms associated with the GIC. Learn more about how GICs work.
Sometimes you may see rates expressed on a term basis. For example, a market-linked GIC may be advertised as having a maximum 9% return over a 3-year term – this really means an approximate maximum of only 3% per year (9%/3 years) – if the market performs well. Read and understand all of the information on this type of investment before making a decision.
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.
Tom
Our website, GetSmarterAboutMoney.ca, provides unbiased information on a wide range of investing topics, including converting your savings to income in retirement, receiving government benefits in retirement and other topics related to growing older.
How you choose to divest and choosing your retirement income options is based on your own individual financial needs and personal financial situation. There is no one option that is right for everyone. Speaking to a financial advisor or tax professional may help you understand how these options work for you and help you make a decision.
Terri
While your money is in a Registered Retirement Savings Plan (RRSP), you don’t pay tax on what you earn – whether capital gains, interest or dividends. However, generally RRSP withdrawals are fully taxed as income, and transfers into registered plans may also trigger tax events. Learn more about investing and taxes.
Speak to a financial advisor or tax professional for advice related to filing taxes, or before making changes to or withdrawals from your RRSP.
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.
Satya
The rules for who can open a TFSA account are set and enforced by the Canada Revenue Agency (CRA). To open a TFSA in Canada, you must be over 18 and have a valid social insurance number (SIN). Additional rules apply if you are a non-resident – you can find this information on the CRA website.
The CRA has resources to help you find out how much TFSA contribution room you have available. You can check your TFSA contribution limit using these CRA resources:
Learn more about TFSAs on GetSmarterAboutMoney.ca.
Reginald
If you have never contributed to a Tax-Free Savings Account (TFSA) and you were eligible and at least 18 years of age in 2009 – the first year the TFSA was available – you should be able to contribute up to the full amount.
To check your TFSA contribution limit, you can use these Canada Revenue Agency services:
Learn more about TFSAs on GetSmarterAboutMoney.ca.
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:
See all of the tools and calculators on GetSmarterAboutMoney.ca.
Keith P.
You may pay a set-up fee when you set up certain accounts, for example, a Registered Retirement Savings Plan (RRSP). Ask about fees and understand what you will pay for an account and services before you open an account.
You can learn more about RRSP fees on GetSmarterAboutMoney.ca.
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:
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.
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:
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.
Jeff
Thank you for submitting your question to Re: Investing!
A locked-in retirement account (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. You set it up with a bank or other financial institution.
We recently answered a question about LIRA that contains other information about LIRA, that you may find helpful. Here is the link: http://www.getsmarterreinvesting.ca/question/can-a-lira-be-included-in-a-self-directed-account/.
Michael
Thank you for your question, Michael.
If you sell an investment for less than you paid for it, you get a capital loss. At tax time, you subtract your capital losses from your gains (a capital gain happens when you sell an investment for more than you paid for it). This gives you your net gains. You pay tax on 50% – or half – of your net gains. The Canada Revenue Agency provides more details about how to use a capital loss.
Read our article about investors and tax.
We are not able to provide advice on individual taxes. Speak to a financial advisor or tax professional for advice about capital losses.
Karen
In general, anyone who sells securities in Ontario or provides advice about investing in securities must be registered with the OSC. You can check registration to find out if a person or company is registered and in which category.
If you have not met with the advisor yet, you may find our article about your first meeting helpful.
If you have any further questions about your advisor’s qualifications, you can contact the OSC’s Inquiries and Contact Centre for assistance.
JaneAnn
Thank you for your question, JaneAnn.
TFSA contribution room is indexed for inflation and annual limits vary by year. If you don’t contribute the full amount each year, you can carry forward the unused amounts, based on the contribution limits for each year. The contribution limit for 2018 is $5,500.
Learn more about TFSAs and comparing TFSAs and RRSPs. You can also learn how to find out your TFSA contribution room from the Canada Revenue Agency.
Speak to a financial advisor or tax professional for advice about the options that work best for your investment plan.
Richard
Thank you for your question, Richard.
You must close your Registered Retirement Savings Plan (RRSP) in the year you turn 71. You can withdraw your RRSP savings in cash, convert your RRSP to a Registered Retirement Income Fund (RRIF) or buy an annuity. Here is how RRSPs work. This article describes in more detail, how you can get income from your RRSP.
Speak to a financial advisor or tax professional for advice about the options that work best for your retirement plan.
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.
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.
Brandon C.
There are a number of benefits to saving in a Registered Retirement Savings Plan (RRSP). For example:
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.
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.
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.
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.
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:
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.
Bry
Yes, Registered Retirement Savings Plans (RRSPs) can hold stocks. Equities (both Canadian and foreign stocks) are typically considered qualified investments that can be held in an RRSP. An RRSP is a type of account, registered with the federal government, which can be used to save for retirement. RRSPs have special tax advantages.
Speak to your registered financial advisor to find out if your old RRSP account is active and whether you have contribution room in your RRSP. Your advisor can also help you figure out which stocks work best for your investment plan.
Warren
Transferring from a Registered Retirement Savings Plan (RRSP) to a Registered Education Savings Plan (RESP) will typically have tax consequences. It is possible in certain circumstances to transfer from an RESP to an RRSP. Find out more about RRSP transfers and what happens if your child doesn’t continue their education.
Learn more about RESPs.
Speak to a registered financial advisor or tax professional for advice about the options that work best for your investment plan. Canada Revenue Agency also provides information about RRSPs and RESPs.
Michael W.
Thank you for your question, Michael.
The federal government sets out the rules for qualified investments for registered accounts such as Registered Retirement Income Funds (RRIFs). The rules that apply to self-directed RRIFs are generally the same as those for Registered Retirement Savings Plans (RRSPs). For more information about eligible investments, go to the Canada Revenue Agency’s information for self-directed RRSPs.
Learn more about inverse exchange-traded funds (ETFs) in this article about Speciality ETFs.
Speak to a registered financial advisor for advice about your options for investments in your RRIF.
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.
Peter N.
Thank you for your question, Peter.
Bonds do not typically come with voting rights. When you buy a bond, you’re lending your money to a company or government for a set period of time (the term). There are bonds called “convertible bonds”, which may come with the right to purchase common shares under certain conditions. Those common shares may come with voting rights.
A voting right, is usually attached to common shares, or equity, in a company, and is the right of the shareholder to vote on matters such as electing directors and corporate actions such as issuing securities.
Learn more about how bonds work and types of bonds.
Speak to a registered financial advisor for advice about stocks and bonds.
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.
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:
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.
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.
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.
Joel
If you were named as the beneficiary, you can inherit the Registered Retirement Income Fund (RRIF) tax free. If you were named as the “successor annuitant”, you can take over the RRIF and automatically start receiving payments from it after your wife’s passing. The rules relating to being a “successor annuitant” are described in this article.
Speak to a registered financial advisor, tax professional or estates lawyer for advice about the best options for you, and find out more about making withdrawals from your RRIF..
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.
Alison F.
HST does not get charged on trades (investments). It does get charged on portfolio advisory fees, since this is considered a service. Review your client account agreement with the registered advisor or firm where your account is held, for details about taxes charged on advisory fees.
You can also read Investment Performance and the Cost of Advice to help you understand your account statements.
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.
Tina
Thank you for your question to Re:Investing!
You can open a Registered Retirement Savings Plan (RRSP) at any age as long as you have earned income and file a tax return. Here’s how RRSPs work.
Learn more about RRSPs and retirement planning.
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.
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.
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:
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.
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.
Kim
Thank you for submitting your question to Re: Investing!
Compounding interest will vary depending on the investments you hold. Find out more about growing your savings with compound interest and the effect of compounding interest by using our calculator.
Speak to your registered advisor to find out what the expected returns are on your investments and how to calculate compounding interest.
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.
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:
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.
Matt
Thank you for your question Matt.
We are not able to provide investment advice, however, the resources provided below can help you make an informed choice.
Our resource GetSmarterAboutRealEstate.ca provides details on what mortgage investment entities (MIEs) are, how they work and the risks associated with them. Learn more about MIEs and other real estate investments in Investing in Real Estate.
Before deciding if any particular product is a good investment choice, create your investment plan and understand the relationship between risk and return.
Speak to a registered financial advisor for advice about the investments that are best for you.
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.
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.
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:
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.
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.
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.
Anonymous
Thank you for contacting Re:Investing!
If a company is public in Canada, they are required to provide certain 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.
If you are concerned about the investment, learn the 4 warning signs of fraud.
If the company is not public, speak to a lawyer to find out what information they are required to provide to you. You can also contact the OSC Inquiries & Contact Centre for more information.
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.
Byran
If you use your RRSP savings to buy an annuity directly you do not pay tax at the time of buying the annuity. You would pay tax on the income received from the annuity. Find out more about getting retirement income from your RRSP, how annuities work and 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 retirement plan.
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.
Dave R.
Thank you for your question to Re:Investing.
You can’t transfer money from your Registered Retirement Savings Plan (RRSP) to the RRSP of someone else. This includes transfers to a spousal RRSP. Doing so can have tax consequences.
Find out more about making RRSP withdrawals before you retire and spousal RRSPs.
Speak to a registered financial advisor or tax professional for advice about the best investing options for you.
John
Thanks for your question John.
We are not able to provide advice, but the following information may be helpful.
The minimum Registered Retirement Income Fund (RRIF) withdrawals set by the federal government are based on the age you are on January 1st of the applicable year. This article describes how the amounts are calculated. It also describes the tax implications if you take more than the minimum amount.
Speak to a registered financial advisor or tax professional to confirm what happens when you have more than one RRIF account.
Bonnie K.
Thanks for your question Bonnie.
You open a Registered Retirement Income Fund (RRIF):
A registered financial advisor can help you with the steps involved in this process.
Learn more about RRIFs. You may also be interested in reading about getting retirement income from your RRSP.
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.
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:
RRSPs:
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.
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.
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.
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.
L
You can open a Registered Retirement Income Fund (RRIF) anytime, but no later than the end of the year you turn 71. You must take out a minimum amount from your RRIF each year. This amount increases as you get older. There is no maximum withdrawal limit. Here is more information about how RRIFs work and making withdrawals from your RRIF.
Speak to your financial advisor to find out the best options for you.
Tyla F.
All investments held in non-registered accounts are subject to tax, but not all investment income is taxed in the same way or at the same rates. Depending on where you hold your bond, e.g. in a registered account like an RRSP or TFSA, the tax you pay may vary. Learn more about bonds and how to buy and sell bonds.
We are not able to provide financial advice. Speak to a registered financial advisor or tax professional for more information what happens when you sell a bond.
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.
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:
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.
Rob C.
Thank you for your question to Re:Investing!
To change your withdrawal preference from yearly to monthly you can speak with your registered financial advisor or firm where you have your Registered Retirement Income Fund (RRIF).
Learn more about making withdrawals from your RRIF.
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.
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.
M
Firms must provide you with account statements on a quarterly basis. Talk to your registered advisor to see if they will send you statements on a monthly basis, on request. Learn more about investment performance and the cost of advice.
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.
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.
Jack
The OSC has information available on proceedings against individuals and companies suspected of violating securities law or acting contrary to the public interest. You can review OSC Proceedings if you are looking for specific individuals and companies.
You can also find information about individuals and companies that engage in actions that may pose a risk to investors on our Investor Alerts & Warnings page or by subscribing to our Investor News.
Gerry S.
Thank you for your question to Re: Investing!
Trailing fees are not tax deductible. CRA’s website outlines amounts you can deduct from your personal income tax return. Management fees on mutual fund investments, such as “trailing fees” are not listed on CRA’s website as tax deductible.
We are not able to provide financial advice. Go to CRA to find out more or speak to a tax professional to find out more about what you are able to claim as deductions on your personal tax return.
Richard M.
It is possible to transfer investments directly to a non-registered account or TFSA (if you have contribution room). This is known as an “in kind” withdrawal.
As there might be tax consequences to the “in kind” withdrawal, we recommend speaking to a registered financial advisor or tax professional for more information about your personal investing options.
Ken
A representative at a bank, trust company, or registered investment firm can help you set up and move stocks into a Tax-Free Savings Account (TFSA). The TFSA would be held at that financial institution or investment firm. You would remain the holder of the stocks if you transfer them to a TFSA held in your name.
There are some tax considerations if you’re thinking of moving stocks to a TFSA. Speak to a registered financial advisor or tax professional to learn more about this type of transfer.
Morton F.
A spouse or common-law partner can be named as successor annuitant to an RRSP or RRIF.
Find out more about RRSP annuitants from the CRA.
Speak to your registered financial advisor or tax professional for more information about RRSPs and beneficiaries.
Mike H.
Thanks for your question Mike. There is no set guideline for what a MER of a mutual fund should be in comparison to the performance of that fund. Before you buy a mutual fund, read its Fund Facts. This is the document provided to you when you purchase a mutual fund and it outlines the MER that will be paid on that fund. Also, consider all costs associated with a mutual fund.
You can use this mutual fund fee calculator to help you compare funds and also review the 5 questions to ask yourself before you buy.
Speak to your registered financial advisor for more information about fees.
Learn more about mutual fund fees and CRM2 reporting of fees on GetSmarterAboutMoney.ca.
Wendy S.
Yes. If you do not contribute one year, you can carry forward your RRSP contribution room and use it the next year, or in the future. Here is more information about How RRSPs work.
You can login to your CRA account to find out your contribution room.
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.
Paul W.
Thanks for your question Paul. A Registered Retirement Savings Plan (RRSP) is usually used to save for retirement. A Registered Retirement Income Fund (RRIF) is used to withdraw money from as retirement income.
Some key points about RRSPs:
Learn more about How RRSPs work.
Some key points about RRIFs:
Learn more about RRIFs.
Mary W.
You have to start withdrawing money from your RRIF in the year after you open it. If you open a RRIF account the year you turn 71, you do not need to make a withdrawal in the first year. If the RRIF account was opened prior to the year you turned 71, you must take out the minimum in that calendar year (between January 1 and December 31). The minimum RRIF withdrawals, which are set by the federal government, are based on the age you are on January 1 of the year. Learn more about making withdrawals from your RRIF.
Mary
Thank you for your question, Mary. While we try to provide as much information as possible, we cannot provide specific advice such as how much to invest in any particular investment and/or recommend specific companies.
We have developed a resource for investors to better understand investing in real estate which also details REITs, how they work and potential risks associated with them. You may want to review the resource and speak to a registered financial advisor before making an investing decision as all investments come with their share of risks.
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:
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.
Verna
You can receive monthly Canada Pension Plan (CPP) payments starting as early as your 60th birthday. What you get depends on what you paid into the plan while you were working. You must be 59 or older and apply 9 months before you retire.
The decision of when to start receiving CPP payments – and what to do with those payments – depends on many individual factors. Learn more about CPP from the Government of Canada.
Toby
Adjusted cost base (ACB) represents the amount you paid for an investment plus any additional costs, such as fees and commissions.
If you have an account with a registered financial advisor you will be able to obtain information about fees and commissions on your account statements. Learn more about charges and other compensation.
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.
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.
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.
Roy T.
Registered dealers and advisors must provide an annual summary of all charges incurred in your RRSP account and all other fees received by the dealer or advisor that relate to your account. Read more about the Report on investment performance and the Report on charges and other compensation that you should be receiving detailing your fees.
If your RRSP includes mutual funds, you can learn more about mutual fund fees and use our mutual fund fee calculator.
Speak to your registered financial advisor to find out when you will get your annual account statement.
Robert
The annual contribution limit for 2018 is $5,500. Your personal limit may be different based on contribution room carried over.
Read more about TFSA basics.
Speak to a registered financial advisor or tax professional to find out what your personal 2018 TFSA contribution would be. You can also check with the CRA.
Red
Thanks for your question. There is no “maximum trailing fee”. Trailing fees or trailing commissions are paid out of the mutual fund’s management fee, so it is reflected in the fund’s Management Expense Ratio (MER). There is no set maximum for the MER of a mutual fund. The Fund Facts document provided to you when you purchase a mutual fund outline the MER that will be paid on that fund.
Speak to your registered financial advisor for more information about fees, and make sure you understand product fees before you make an investment.
Learn more about mutual fund fees on GetSmarterAboutMoney.ca.
Perry
The rules relating to RRSPs relate to the age of the account holder, not whether they are retired or not. You must close your RRSP in the year you turn 71. You can withdraw your RRSP savings in cash, convert to a RRIF or buy an annuity.
You can contribute the lower of:
Learn more about how RRSPs work.
Speak to a registered financial advisor or tax professional to learn more about your own retirement saving options.
Patricia
There is no one right investment plan for everyone. Typically, holding a mix of investments from 3 main asset classes – cash and cash equivalents, equities and fixed income investments – provides a fairly well-diversified portfolio. The right asset mix depends on many factors, including your age, tolerance for risk and when you need your money. Here are 7 questions to ask yourself before you invest.
Speak to a registered financial advisor for help putting together an asset mix that fits your investing personality.
Mathieu
While we try to provide as much information as possible, we are not able to provide specific investment advice.
When it comes to investing, having a mix of different investments can help reduce risk and protect your portfolio from losing value (or money) all at the same time, especially if there is a downturn in the markets. The right mix is different for each individual and situation, but it could include a variety of stocks, bonds, cash and other investments in different industries, countries or asset class. Check out some tips to be a smart investor.
It is also important to make sure the individuals and companies you are going to for investments and advice are qualified. Speak to a registered financial advisor to learn what mix of investments and investing strategy may be right for you.
Maria B.
It is good practice to meet with your advisor annually to review your information, progress and update your plan, if appropriate. When you open your account, you may have created an investment policy statement, which outlines the rules you want your advisor to follow for your portfolio. This statement would specify how your portfolio will be monitored, and when or why it should be rebalanced.
Check out What to expect from your advisor and Your first meeting with your advisor.
Kelly
Thank you for your question. Two previous Re: Investing questions may help you understand the difference between these two investments:
While we do our best to provide general information to help you get started, we are not able to provide advice. The type of investment that is right for you depends on many factors, including your financial needs, risk tolerance and overall personal financial situation. Speak to a registered financial advisor for advice related to choosing investments.
You can learn more about mutual funds and exchange-traded funds (ETFs) on GetSmarterAboutMoney.ca.
K
The federal government sets the minimum amount you must take out of your RRIF every year. 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 the RRIF in the year after you open it. The minimum amount increases as you get older. For example, if you are 71 on January 1, the minimum amount is 5.28%. If you are 72 on January 1, the minimum amount is 5.40%. Learn more about RRIFs.
We are not able to provide financial advice. Speak to a registered financial advisor or tax professional to learn more about making withdrawals from a RRIF.
Holly L.
You can transfer investments, such as stocks or bonds, from a non-registered account to your RRSP. This is called a transfer “in kind”. You might do this if you don’t have the cash to make your contribution, but you have investments that you want to use instead.
This has tax consequences, however. You are considered to have sold your investments at their fair market value and will have to report any resulting gain on your tax return. You can claim an RRSP deduction equal to the fair market value of the investments transferred to your RRSP. If the fair market value results in a loss, in order to claim the loss on your tax return, you must first sell the investments and then contribute the cash proceeds to your RRSP.
Learn more about RRSP transfers and speak to a registered financial advisor.
Hank
It is an option to hold a mortgage in an RRSP. However, this method of investing should be considered carefully, on an individual basis, in order to consider the risks and benefits.
We are not able to provide advice. Speak to your registered financial advisor to consider the best options for you.
Learn more about self-directed RRSPs and investing in real estate.
Glynis P.
If you are considering changing investment companies, make sure you speak to both financial institutions about the costs, including service fees, before you transfer. Make sure the financial institution you are transferring your accounts to is registered. Learn more about how fees affect your investment.
Eva & Graham
There is more than one factor involved in determining what will save you money in the long run. It is important to look at the cost of fees, together with the potential value of the investment. These factors should be reviewed on an individual basis in consultation with your registered financial advisor.
Front-end load fees are paid at the time you buy your units or shares. This is a percentage of the amount you are investing in a fund. It is paid to the registered firm that sells you the fund. You can negotiate this fee with your advisor.
Deferred sales charges are paid at the time you sell your units or shares. You will pay less if you hold the fund longer.
For more detailed information about these fees, learn more about mutual fund fees on GetSmarterAboutMoney.ca.
Eric B.
When it comes to minimum RRIF withdrawal amounts, the minimum amount does increase as you get older. The percentage is based on your age on January 1 of the year you are making the withdrawal. For example the minimum amount for a 72 year old is 5.40%. The minimum for a 85 year old is 8.51%.
Learn more about making withdrawals from your RRIF.
Dean C.
The net asset value (NAV) of a mutual fund represents the mutual fund’s asset less its liabilities. NAV will fluctuate with changes in the market value of the mutual fund’s particular investments.
Typically, the NAV of a mutual fund will fall initially because a pay out of a distribution will lower the assets and cash in the mutual fund. This will be based on a valuation – typically outlined in the prospectus of the mutual fund on the System for Electronic Document Analysis and Retrieval (SEDAR). This does not mean the NAV will be lower indefinitely. There are other factors that affect calculation of NAV. You should review the NAV in the prospectus to understand how it is calculated. Learn more about mutual funds and NAV and where to get information about a prospectus on SEDAR.
Darrrell
While we do our best to provide general information, we cannot provide financial advice.
Guaranteed investment certificates (GICs) are considered banking products, rather than “securities”. You can learn more about GICs on GetSmarterAboutMoney.ca, including tips for choosing a GIC.
In order to make the decision for time period, speak to your registered financial advisor for more information about products that work best for your personal investment goal.
Dale
The Smith Manoeuvre is a complicated method that is meant to gradually restructure your mortgage into a tax-deductible investment loan.
While we try to provide general information, we are not able to provide advice. Complicated forms of investing typically carry increased risks and should be considered carefully with an investor’s registered financial advisor or tax professional. Learn more about investing in real estate and the risks associated with them.
Corinna
Thanks for your question. While we try to provide general information, we are not able to provide advice. You may find our article about “Converting your savings to income” helpful for your purposes.
Speak to a registered financial advisor for information about income investments, tailored to your individual needs.
Brian J.
Thanks for your question. Taking out the minimum withdrawal amount allowed does not dissolve a mutual fund in a Registered Retirement Income Fund (RRIF) account. Read more about how RRIFs work and making withdrawals from your RRIF.
We are not able to provide financial advice. Speak to a registered financial advisor or tax professional to learn more about making withdrawals from an RRIF.
Brian
You are not required to make a withdrawal from your Registered Retirement Income Fund (RRIF) until the year after you open it. However, you can make withdrawals in the year you open a RRIF. Learn more about RRIFs.
We are not able to provide advice. Speak to your registered financial advisor to learn more about making withdrawals from your RRIF, including withholding tax on withdrawals.
Bill R.
There are limits on contributions to a Tax-Free Savings Account (TFSA). The total contribution you have depends on factors including the year you first were able to contribute to a TFSA, and withdrawals you have made from your TFSA. Learn more about how TFSAs work.
Growth on your investments inside a TFSA does not affect your contribution room, and you can take money out when you want, for any reason, without paying any tax. If you take money out, you can re-contribute it the following year, in addition to the annual maximum. There are penalties for over-contributions. If you are not sure how much contribution room you have, contact the Canada Revenue Agency.
Benedicto G.
Contributions to a company pension plan do lower your available contribution to a Registered Retirement Savings Plan (RRSP). Learn more about plan participation and your RRSP.
While we try to provide general information, we are not able to provide advice. Types of pension plans and employer pension plan contributions vary. Speak to the plan administrator at your company for information about your pension plan.
Learn more about pension plans on GetSmarterAboutMoney.ca.
Ben R.
All mutual funds have fees and expenses that reduce your investment return. There are different types of fees and expenses. For example: sales charges, other transaction fees, account fees and fund expenses. When you mention “early trading fee”, you may be referring to “front-end load” or “initial sales charge”. Front-end load fees and “deferred sales charge” (also known as “back-end load”) are both types of sales charges.
Front-end load fees are paid at the time you buy your units or shares. This is a percentage of the amount you are investing in a fund. It is paid to the registered firm that sells you the fund. You can negotiate this fee with your advisor. Deferred sales charges are paid at the time you sell your units or shares. You will pay less if you hold the fund longer.
For more detailed information about these fees, read about mutual fund fees on GetSmarterAboutMoney.ca. Learn more about the Report on charges and other compensation. Speak to your registered financial advisor for information about fees specific to your investments.
Ben K.
As a first step to investing, you may want to review the following topics:
While we try to provide general information to help you get started, we are not able to provide investment advice. Speak to a registered financial advisor for information specific to your personal financial situation and savings goals.
Barbara
There are some considerations if you’re thinking of moving stocks to a Tax-Free Savings Account (TFSA). You may be able to make “in kind” contributions (for example, securities you hold in a non-registered account) to your TFSA, as long as the property is a qualified investment. In doing so, you may trigger a tax event. This type of “in kind” transfer is considered a disposition by the Canada Revenue Agency – meaning you may need to report a capital gain if the fair market value of the stock has gone up since you purchased it. If the stock value has gone down, you cannot claim the capital loss.
As tax rules are enforced by the Canada Revenue Agency (CRA), if you have questions about this type of transfer, you can contact the CRA. You can also speak to a registered financial advisor to learn more about this type of transfer.
Learn more about investors and tax.
Akhil A.
How to monitor mutual fund performance provides different ways you can compare mutual funds. One way is to review a mutual fund’s Fund Facts, which provides information about performance. Fund Facts can be used as a comparison tool between specific funds. Another option is using resources such as Globefund and Morningstar to see how a mutual fund is performing relative to other similar funds.
You can also use our Mutual fund fee calculator to compare specific funds.
Andrew
Estate administrative tax in Ontario is calculated based on the total value of the deceased’s assets at the time of death. You can learn more about the Ontario estate administrative tax from the Ministry of Finance.
We are not able to provide financial or legal advice. Speak to a tax professional or estate lawyer for advice related to the handling of an estate.
Curtis
Thanks for your question. Generally, you must have a specific password to redeem your bitcoin and you may wish to contact the entity where you purchased it to confirm the process. You can learn more about how cryptocurrencies work and the risks associated with them.
Bitcoin is not considered a security, and the Ontario Securities Commission (OSC) does not directly regulate bitcoin, nor does it oversee the redemption of bitcoin. We are not able to provide advice related to buying or selling investments.
Gary S.
While we do our best to provide general information to help you, we are not able to provide advice. In this case, we can’t tell you what type of investment would work best for you. This is based on personal information – including your income, tax considerations, savings and debts.
For many investors it may make sense to reduce overall investment risk in retirement; however this may not be right for everyone. A registered financial advisor can help you review your goals and savings strategy.
Chris
While we have provided general information about Bitcoin below, Bitcoin itself is not a security, and is not regulated by the Ontario Securities Commission (OSC). We encourage you to learn more by reading the information linked in the last paragraph below.
There are specific ATM machines that you can use to purchase Bitcoin and other cryptocurrencies. When you purchase bitcoins, generally your bitcoins will be deposited in your “virtual wallet”. If you do not have a virtual wallet, you may receive a printed receipt with a code. This receipt will be the only record you have of your bitcoin purchase – if you lose it there is no way to recover this code – so keep it in safe place and do not share it with others.
Some scammers have targeted individuals by asking them to deposit funds into these bitcoin ATMs. If you are asked to do this, contact the Ontario Securities Commission.
Keep in mind that there is limited use for bitcoins at this time. They are not considered legal tender, so, for example, you can’t use bitcoins in place of cash at a store.
Investors may be eager to get in on this new trend, but like any investment, make sure you understand how they work and the considerable risks that often accompany these investments before you make a decision to invest. Learn more about cryptocurrencies on GetSmarterAboutMoney.ca.
Doug D.
Taxes on exchange traded funds (ETFs) depend on many factors, including:
With ETFs, you’ll generally pay tax on:
You should not be affected by distributions that occurred before you purchased the ETF. However, before you make a purchase, speak to your registered financial advisor or tax professional to learn how taxes apply in your situation – based on where you are holding the ETF and the type of ETF you purchase. Learn more about how ETFs work.
M. W.
You will not be issued tax slips for mutual funds held inside a Tax-Free Savings Account (TFSA) like you are for mutual funds held in non-registered accounts, as all gains – whether interest, capital gains or dividends – are not taxable, even after they are withdrawn. Keep in mind capital losses within a TFSA cannot be used to offset capital gains outside of a TFSA.
Speak to your registered financial advisor or tax professionals to learn how taxes apply to your portfolio and registered savings accounts.
Tom
No, earnings on investments inside a Registered Retirement Savings Plan (RRSP) cannot be counted towards contributions. New RRSP contributions are tax-deductible, and the earnings on investments inside your RRSP are not taxed until you make a withdrawal. Learn more about RRSPs and making RRSP contributions.
While we try to provide general information to help you get started, we are not able to provide advice. Speak to a registered financial advisor or tax professional to learn about how your RRSP contributions.
Elizabeth
While you can make contributions to your Registered Retirement Savings Plan (RRSP) up to a certain deadline in the new year to count toward your previous years’ contributions, withdrawals do not work in the same way. Withdrawals made from January 1, 2018 would count toward your 2018 income.
You will receive a tax receipt for RRSP withdrawals made during the calendar year. The withdrawals are taxed as income in the calendar year you make the withdrawal.
Speak to a registered financial advisor or tax professional to learn about how your RRSP withdrawals will be taxed. Learn more about RRSPs.
Bruce S.
It is not possible to set up a Registered Retirement Savings Plan (RRSP) for someone else. Certain registered accounts can be set up by persons other than the beneficiary, such as a Registered Education Savings Plan (RESP).
If what you mean is that you were named as a beneficiary of your friend’s RRSP, the RRSP must be included for tax purposes as part of your friend’s estate – an RRSP can only pass along directly if the beneficiary named is a qualified beneficiary, in other words, a spouse, common-law partner or financial dependant. You may consider contacting the estate’s executor or speaking to an estate lawyer for more information.
Learn more about RRSPs and wills and estate planning.
Heidi
A family plan can have more than one beneficiary. But each beneficiary must be:
Nieces and nephews do not count as blood relatives under family plan rules. However, you are able to open an individual RESP for your nephews. Note that the Canada Education Savings Grant (CESG) and Canada Education Savings Bond (CESB) are based on the total contributions even if there are multiple RESPs, and not per plan. For example, if you set up an RESP and your brother sets up an RESP for the same child, both accounts cannot receive the maximum grant and bond.
Before you set up an RESP, make sure you understand the rules regarding contributions, government grant and bonds, and withdrawals. Learn more about RESPs.
V. S.
There is no maximum that you can withdraw from a Registered Retirement Income Fund (RRIF) in any given year, though there is a minimum amount that must be withdrawn based on your age.
There is no allowance for deferring reporting RRIF withdrawals as income for any reason, and the withdrawal is included as income in the calendar year it was withdrawn. Any withdrawals above the minimum amount will have a withholding tax taken immediately, and additional tax may be applied at tax time depending on your total income for the year. Learn more about making withdrawals from your RRIF.
While we are able to provide general information, we cannot provide advice related to the handling of your investments. Speak to a tax professional to see if you qualify to claim medical expenses and to confirm rules relating to withdrawal. Learn more from the Canada Revenue Agency.
Rui
The closing price of a share is the last price at which a share is traded on a particular day. This does not mean that you will pay this price for a share. What you pay is the share’s “ask price” – the lowest price at which someone is willing to sell one unit of the share – this may change throughout the trading day. Learn more about buying and selling shares.
When it comes to the number of shares you can buy, generally the only restriction is the number of shares available for sale – the share volume.
If you are planning to buy a large amount of one company’s share, make sure you have considered how the share fits in your overall portfolio, and consider how it changes your portfolio’s diversification. Speak to a registered financial advisor to help you answer questions about investment risk.
B and Pankaj G.
We are not able to provide any official values of what average fees are for investors. Fees depend on a number of factors including services provided, and total dollar value of a portfolio. We encourage investors to shop around and ask questions to understand the services offered and fees charged.
Note that service fees do not necessarily include fees such as management expense ratios on mutual funds and ETFs, and fees do not indicate whether your investments will do well.
You can learn about the new Report on Charges and Other Compensation and the Report on Investment Performance that investors receive on InvestmentReporting.ca.
AC
A Registered Disability Savings Plan (RDSP) allows people with disabilities and their families to save for their future. Government grants add to your savings and your investments grow tax-free.
To receive the Canada Disability Savings Grant and the Canada Disability Savings Bond (depending on income), you must apply through the financial institution where you have your RDSP. The application forms are available through Employment and Social Development Canada (ESDC).
Learn more about RDSPs.
Mashiur R.
While we do our best to provide general information to help you, we are not able to provide advice. In this case, we can’t tell you what type of investment would work best for you. This is based on personal information – including your income, tax considerations, savings and other debts. A registered financial advisor can help you review your goals and savings strategy.
A question you may ask first is whether it’s better to pay down your debt or invest. This is one that a lot of people have, and there are things to consider, for example, your risk tolerance. There are many types of risk to consider when investing, and some investments are generally riskier than others. For example, consider what would happen if you lose money on your investment – would you be comfortable with this risk? There is no one right answer for everyone and a registered financial advisor can help with reviewing your financial goals. Learn more about investment risk and risk tolerance.
Try our Pay Down Debt or Invest Calculator using different scenarios for the expected investment return as a first step.
John B.
A Tax-Free Savings Account (TFSA) allows you to take money out when you want, for any reason, without paying any tax. If you take money out, you can re-contribute it the following year, in addition to the annual maximum. You can check your contribution room through the Canada Revenue Agency using one of these services:
While we try to provide general information to help you get started, we are not able to provide advice. Speak to a registered financial advisor or tax professional to learn about investing in your TFSA. Learn more about TFSAs.
Anish
Regardless of where it comes from, it is illegal to withhold income from the Canada Revenue Agency (CRA), and income and gains on assets are taxable, whether they are in the form of dollars, gold, foreign currency or cryptocurrency. If you are not sent tax forms from the exchange or service you use to buy or and sell cryptocurrencies, you are still required to report this income in your taxes.
If you are deemed to be in the business of buying or selling cryptocurrencies, your gains may be deemed to be ordinary income (rather than capital gains). In addition, cryptocurrencies received as payment for goods and services (including as a reward for engaging in cryptocurrency mining) are taxable in the year in which such payments are received.
You can read an archived version of the CRA’s statement about digital currency on the CRA website. Speak to a registered financial advisor or tax professional for information related to reporting income from the purchase of digital currencies. Learn more about cryptocurrencies on GetSmarterAboutMoney.ca.
Jun
Generally debit cards are tied to your personal chequing or savings account – not a term deposit such as a guaranteed investment certificate (GIC). GICs are generally locked until they mature, or until you cash it in, depending on the options you choose. Learn more about GICs.
That said, regardless of what can be accessed, if you lose your debit card, alert your bank or financial institution immediately to avoid becoming a victim of identity theft. Some financial institutions allow you to cancel or suspend your debit card online or through a mobile app. This ensures no one has access to your accounts, and you can check to make sure no charges were made before you were able to cancel your card. Your financial institution will issue you a new card.
Rick S.
Pensions are regulated provincially. In Ontario, you have the following options for a defined contribution (DC) pensions plan when you retire:
You can also put your money into both. For example, you can buy an annuity and transfer the balance of your pension to a LIF. You can also use your LIF savings to buy an annuity at any time in the future, if your need for guaranteed income increases as you get older.
Learn more about your DC pension options at retirement.
Thor O.
It is up to you to decide when and how often you make withdrawals from your RRIF. If you are changing the frequency of your withdrawals, or if you want to make additional withdrawals throughout the year, your financial institution may charge a fee to do so.
Speak to your registered financial advisor to learn more about making this change. Learn more about making withdrawals from your RRIF.
John E.
To calculate the capital loss of an investment, you need to know the “adjusted cost base”. The Canada Revenue Agency (CRA) generally defines adjusted cost base (ACB) as “the cost of a property plus any expenses to acquire it, such as commissions and legal fees”.
See this previous Re: Investing question for more information about calculating adjusted cost base.
You will need to know how much you paid for your holdings (whether all at once or overtime), how much you sold the securities for and any associated transaction costs to buy and sell your holdings. If you do not have this information, you may wish to contact the investment firm where your securities were held. The Ontario Securities Commission is not able to provide advice. Speak to a registered financial advisor or tax professional to help you calculate ACB.
Swati
The Canadian federal government offers a Registered Education Savings Plan (RESP) to help save for a child’s education. However, in order to open an RESP, your child must have a social insurance number (SIN), and be a resident of Canada. Learn more about RESPs.
To learn about other options to save for your child’s education, speak to a registered financial advisor.
Amador O.
There is no direct way to transfer funds in a Registered Retirement Savings Plan (RRSP) to a Tax-Free Savings Account (TFSA). In order to contribute funds to a TFSA from an RRSP, you must withdraw the funds, and pay any applicable withholding tax, plus any additional taxes at tax time. You must also have the available contribution room in your TFSA.
Speak to a registered financial advisor or tax professional for advice related to the tax handling of your investments.
Yannis P.
There is no direct way to convert a Registered Retirement Savings Plan (RRSP) to a Tax-Free Savings Account (TFSA). In order to contribute funds to a TFSA from an RRSP, you must withdraw the funds, and pay any applicable withholding tax. You must also have the available contribution room in your TFSA.
Before the end of the year you turn 71, you must close your RRSP and take one of three actions (or any combination of these): convert it to a Registered Retirement Income Fund (RRIF), purchase an annuity, or take the RRSP as cash. Learn more by reading this
