“Where can I start looking to invest money?”

“How does a TFSA work?”

“How do I figure out how much I need to save for retirement?”

“What is and what are the criteria to participate in the exempt market?”

Submitted by: Mary S.

Thank you for submitting your question to Re: Investing.

There are a number of different prospectus exemptions, and each has its own rules about who can sell securities and who can buy securities under the prospectus exemption. Criteria for individuals who meet certain income or financial asset thresholds in addition to investment limits are set within each prospectus exemption of National Instrument 45-106 (and can vary per province). These exemptions allow companies to sell their securities to individuals without the protections the preparation of a prospectus affords. This previous Re: Investing question may help provide additional insight

Each province and territory are responsible for regulating their own capital markets through the administration of their respective Securities Act. In Ontario, it is the Ontario Securities Commission (OSC). It may be beneficial to contact your local securities regulator for information on regulatory matters or speak with a legal professional for advice.

Visit GetSmarterAboutMoney.ca to learn about the exempt market and prospectus exemptions including, the criteria for eligible, non-eligible, and accredited investors.

Mar 08, 2019
Basics, Regulation and policy,

“Is there a limit to the amount you can invest within a GIC?”

Submitted by: Sandra

Thank you for submitting your question to Re: Investing.

There is no limit to the amount you may invest in Guaranteed Investment Certificates (GICs). GIC deposits are eligible for coverage up to $100,000 by the Canada Deposit Insurance Corporation (CDIC) at each financial institution if deposited at a member bank of the CDIC . Be aware, if you hold more than $100,000 in GICs from any one financial institution, the excess amount will not be protected against loss. U.S. dollar GICs and GICs with terms longer than 5 years are not insured.

Visit GetSmarterAboutMoney.ca to learn more GICs, investing and financial topics. Speak with a registered financial representative for advice to fit your personal situation.

Mar 08, 2019
Basics, Products,

“How do I invest in or make money from real estate?”

Submitted by: Pat

Thank you for submitting your question to Re: Investing.

Real estate investments can offer a range of benefits however, there is no guarantee that you will earn an income or profit and, like any investment, there are a number of risks and uncertainties that you need to carefully consider before investing. If you are thinking of renting out your home, or another property you own there are a few considerations to think about such as, responsibilities as a landlord (providing extra maintenance and meeting legal requirements).

Visit GetSmarterAboutMoney.ca to learn about understanding real estate investments. Speak with a registered financial representative or real estate professional for advice.

Mar 07, 2019
Basics,

“What are MER Fees on EFTs?”

Submitted by: Dave H.

Thank you for submitting your question to Re: Investing.

There are two main types of fees associated with ETFs:

Like a mutual fund, ETFs pay management fees and operating expenses. This is called the management expense ratio (or MER). It is the yearly cost of a fund investment, whether it makes or loses money. It covers investment management, marketing, administrative costs, and fees to salespeople (called trailer fees). It’s written as a percentage of the fund’s value. While you don’t pay these expenses directly, they affect you because they reduce the fund’s returns. You may also incur other fees such as, trading costs (stock commissions and or transaction fees) to buy an ETF.

Before you invest in an ETF, read the prospectus or its summary disclosure document to understand its fees (MERs applicable to ETFs can vary between funds and generally range from 0.30% to 1% but there are also some ETFs that have fees up to 2%). You can compare fees and performance at websites like Morningstar.

Visit GetSmarterAboutMoney.ca to learn more about ETFs including, ETF fees, and other financial topics. Speak with a registered financial representative for advice that fits your personal situation.

Mar 07, 2019
Basics, Products,

“Can international students studying in Canada invest in the market?”

Submitted by: David C.

Thank you for submitting your question to Re: Investing.

If you’re currently studying in Canada, there are many investment options available to you. International students may be able to open an investment account providing you have acceptable identification. Please contact a Canadian financial institution for more information. This previous Re: Investing question may be helpful as you move forward.

Visit the GetSmarterAboutMoney.ca getting started, making a plan, and getting advice hubs to help build your knowledge. Speak with a registered financial representative for investment advice to fit your personal situation.

Mar 07, 2019
Basics,

“Can a son or daughter transfer funds from their RRSP to their parent’s RRSP to help pay off debt?”

Submitted by: Lepage

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. Withdrawals can be made from an RRSP, but you sure be aware that if you withdraw money from your RRSP before you retire, your withdrawal will be immediately subject to a withholding tax and the amount withdrawn is also considered taxable income for the year.

Visit GetSmarterAboutMoney.ca to learn about RRSP withdrawals and managing debt. Speak with registered financial representative or tax professional for advice to fit your personal situation.

Mar 05, 2019
Basics, Products,

“Is the tax higher when a withdrawing from a RRIF or RRSP?”

Submitted by: Chayer

Thank you for submitting your question to Re: Investing.

Similar to RRSPs, all withdrawals from a RRIF are fully taxable as income in the year withdrawn (generally between 10% – 30%). Withholding taxes also apply on withdrawals that exceed your minimum withdrawal amount and if you live in Quebec, provincial taxes may also be withheld in addition to federal taxes. Your financial institution will hold back an amount, based on the withholding tax rates, and pay it directly to the government(s) on your behalf. Despite withholding taxes being deducted from withdrawals, you will also have to report the withdrawal as income and may need to pay additional tax later when you file your income tax return depending on your overall tax situation.

Visit GetSmarterAboutMoney.ca to learn about making withdrawals from your RRIF and tax on investments. We are not able to provide advice but try to provide general information to help with the next step. Speak with a registered financial representative or tax professional for advice.

Mar 05, 2019
Basics, Products,

“Why does the same mutual fund exist in different series?”

Submitted by: Gordon M.

Thank you for submitting your question to Re: Investing.

Mutual funds are categorized into different series or classes (identified by a letter like Series A or Series D) which are designed to provide different benefits for investors and/or different compensation arrangements for the advisors that sell the fund. Learn more about mutual fund series. You may pay varying mutual fund fees depending on which funds you buy, how you buy them and what accounts you hold them in. You can find a description of the different series and their associated fees in a mutual fund’s Fund Facts and its simplified prospectus.

Speak with a registered financial representative for investment advice that fits your personal situation and investment goals. Visit GetSmarterAboutMoney.ca to learn about investing and other financial topics.

Feb 28, 2019
Basics, Products,

“How is a RRIF setup?”

Submitted by: Ken G.

Thank you for your question to Re: Investing.

A Registered Retirement Income Fund (RRIF) is an account registered with the federal government, designed to provide you with a steady income stream from your RRSP throughout retirement. You put money into your RRSP to accumulate savings for retirement which are then withdrawn from your RRIF as retirement income. You open a RRIF by transferring money from your RRSP which must be converted into a RRIF by the end of the calendar year you turn age 71. You may do so by contacting the bank or financial institution where you hold your RRSP.

Visit GetSmarterAboutMoney.ca to learn about how RRIFs and RRSPs work including, making RRSP withdrawals after you retire. Speak a registered financial representative for investment advice tailored to your personal financial needs and financial situation.

Feb 27, 2019
Basics, Products,

“How are RRSPs taxed?”

Submitted by: Susan

Thank you for your question to Re: Investing.

Registered Retirement Savings Plans (RRSPs) have special tax advantages in that your investments grow tax-free and your contributions are tax-deductible—meaning you get immediate tax relief by deducting your RRSP contributions from your income each year. Money you make on your RRSP investments are not taxed as long they remain in the plan. You only pay tax on your RRSP savings (both your investment earnings and contributions) when withdrawn. If you withdraw money from your RRSP before you retire, your withdrawal will be immediately subject to a withholding tax and the amount withdrawn is also considered taxable income for the year. RRSPs effectively defer your tax liability to the future when it’s possible your marginal tax rate will be lower in retirement than it was during your contributing years.

Visit GetSmarterAboutMoney.ca to learn about how RRSPs work, making RRSP contributions and making withdrawals before and after you retire. Speak with a registered financial representative or tax professional for investment and tax advice.

Feb 26, 2019
Basics, Products,

“Are employer pension plans mandatory?”

Submitted by: Jean K.

Thank you for your question to Re: Investing.

Your employer may offer employer-sponsored pension plans to help you save for retirement – this can be in the form of a Group RRSP or another savings plan such as, a defined benefit (DB) pension plan, or a defined contribution (DC) pension plan. Membership in some pension plans can be mandatory or voluntary depending on the terms of your employer’s plan. Your plan administrator or plan provider should be able to provide you with information to understand how your plan works.

You may also wish to speak with a registered financial representative for investment advice.

Feb 26, 2019
Basics, Products,

“How do I carry forward a capital loss on investments?”

Submitted by: Eberhard

Thank you for submitting your question to Re: Investing.

We are not able to provide advice but try to provide general information to help you take the next step. Depending on the type of account(s) your investments are held within generally, capital losses on an investment can be offset against capital gains (not against other types of income) to determine your net gains in the current year or any of the previous three years you can also carry forward the capital losses indefinitely, to be offset against future capital gains.

Visit GetSmarterAboutMoney.ca to read our article on investors and tax. Speak to a financial advisor or tax professional for advice about capital losses.

Feb 26, 2019
Basics,

“How is the minimum amount calculated for a RRIF?”

Submitted by: Barry

Thank you for your question to Re: Investing.

There are two key decisions you must make with a Registered Retirement Income Fund (RRIF), how much money to take out and when. You can choose your withdrawal amounts as long as you make the minimum annual withdrawal, which is a set percentage determined by the government. As you get older, this percentage increases. All withdrawals are subject to tax. The minimum withdrawal amount for RRIFs established in 2015 and later years continue to be calculated with the formula 1/(90 – age) for ages 70 and under. For ages 71 and above, new factors in the 2015 federal budget are used to calculate the minimum amount.

Visit GetSmarterAboutMoney.ca to learn about investing, living in retirement, and other financial topics. Speak with a registered financial representative or tax professional for advice tailored to your personal financial needs and financial situation.

Feb 13, 2019
Basics, Products,

“Can I withdraw from my RRSP tax-free if I pay it back?”

Submitted by: Susan H.

Thank you for your question to Re: Investing.

When you make withdrawals from your Registered Retirement Savings Plan (RRSP) you will immediately pay withholding tax on the money you take out, meaning your financial institution will hold back the tax on the amount you withdraw and pay it to the government directly. You also must report that money as taxable income and you may have to pay even more at tax time depending on your overall tax situation. You’ll also permanently lose the contribution room you originally used to make the contribution. There are two ways you can borrow money tax-free from your RRSP as long as you pay it back—buying your first home under the Home Buyers’ Plan (HBP) or paying for full-time or part-time education under the Lifelong Learning Plan (LLP).

Visit GetSmarterAboutMoney.ca to learn about making withdrawals from your RRSP before and after you retire. Speak a registered financial representative or tax professional for advice.

Feb 13, 2019
Basics, Products,

“Can an individual RRSP be combined with a spousal RRSP?”

Submitted by: Adam G.

Thank you for your question to Re: Investing.

Your Registered Retirement Savings Plan (RRSP) cannot be combined with a Spousal RRSP. Spousal RRSPs are designed for couples to split retirement income. A spousal RRSP is registered in the name of your spouse or common-law partner. They own the investments in the RRSP, but you can contribute to it. You get the tax deduction for any contributions made to a spousal RRSP but any contributions you make reduce your own RRSP deduction limit for the year. This won’t affect how much your spouse can contribute to their own RRSP.

Visit GetSmarterAboutMoney.ca to learn about making withdrawals from your RRSP before and after you retire. If you or your spouse have financial goals that you are trying to accomplish, we suggest you speak to a registered financial professional who can help you determine the best way to reach your goals based on your personal financial situation

Feb 13, 2019
Basics, Products,

“How do I choose an asset mix, what investments should be included?”

“Must RRSP contributions be deducted in the same year they are made?”

Submitted by: Mohit

Thank you for your question to Re: Investing.

You don’t have to deduct RRSP contributions on your tax return in the same year you make them, you can wait and deduct it in a future year. You may choose to do this if you looking for income tax savings in the future such as if think your income will be higher in the future, moving you up to a higher tax bracket. You do not have to claim the undeducted contributions in a single year. Learn more about unused RRSP contributions.

Visit GetSmarterAboutMoney.ca to learn more about, RRSPs, investing and other financial topics. We are not able to give advice, speak with a tax professional for tax advice that fits your personal situation.

Feb 13, 2019
Basics, Products,

“How do I determine my RRSP and TFSA available contribution room?”

Submitted by: Greg

Thank you for submitting your question to Re: Investing.

The Canada Revenue Agency (CRA) calculates your RRSP deduction limit based on your earned income in previous years. Your deduction limit is based on 18% of your earned income (employment earnings, self-employment earnings, and other considerations) to a maximum value for the year including, any unused contribution room. TFSA contribution room is not based on your income. Every year, you may contribute up to the TFSA dollar limit plus any TFSA withdrawals or unused contribution room from previous years. Be aware that there are penalties for exceeding your contribution limits. You may check your TFSA and RRSP available contribution room by using the CRA’s My Account or by calling the Tax Information Phone Service (TIPS).

To learn more about how TFSAs and RRSPs work visit GetSmarterAboutMoney.ca. Speak with a registered financial representative or tax professional for advice that fits your personal situation.

Feb 12, 2019
Basics, Products,

“How do I determine if a company is publicly traded on a stock exchange?”

Submitted by: Colin

Thank you for submitting your question to Re: Investing.

Each company traded on a stock exchange has a ticker symbol that is used to identify the investment. Usually, an exchange provides a function on their website to either search by ticker symbol or by company name. Additionally, you may wish to check the websites for companies that interest you. Companies usually have sections on their website that contain disclosure documents such as, annual reports, quarterly statements, news releases etc. that will help make an informed investing decision. You can also check the OSC’s Reporting Issuer List to see if a company is a publicly traded company in Ontario.

Visit GetSmarterAboutMoney.ca to learn about investing and other financial topics. Speak with a registered financial representative for investment advice that fits your personal situation.

Feb 12, 2019
Basics, Regulation and policy,

“How much can I take out of my RRIF?”

Submitted by: Samuel

Thank you for submitting your question to Re: Investing.

With a Registered Retirement Income Fund (RRIF) there are two key decisions you must make, how much money to take out and when. You can choose your withdrawal amounts as long as you make the minimum annual withdrawal, which is a set percentage determined by the government. As you get older, this percentage increases. Depending on the type of investments held within your RRIF, any associated fees and the amount you elect to withdraw (above the minimum requirement) determine the length of time funds remain in your RRIF.

Visit GetSmarterAboutMoney.ca to learn about how RRIFs work including, 5 types of RRIFs and other financial topics. Speak with a registered financial representative for advice that fits your personal situation.

Feb 12, 2019
Basics, Products,

“What happens to a RESP when the plan subscriber dies?”

Submitted by: Debra M.

Thank you for submitting your question to Re: Investing.

We are not able to provide financial, legal or tax advice but try to provide general information to help you take the next step. If there is not a surviving joint subscriber to continue contributions, a RESP becomes part of the deceased estate which is governed by the probate process including, any directives set out in the deceased’s will. If a joint subscriber was named when the RESP was set up, this person can take on the responsibilities of contributions into the RESP for the beneficiary’s post-secondary education. A RESPs value may be subject to probate fees and tax.

Speak a registered financial representative or legal professional to help understand your options. Visit GetSmarterAboutMoney.ca to learn about investing and other financial topics including, how RESPs work and a RESP Savings Calculator to estimate future education costs.

Feb 12, 2019
Basics, Products,

“How do I cut my mortgage costs and buy a second home?”

Submitted by: Nes

Thank you for submitting your question to Re: Investing.

Generally, a mortgage represents one of the largest expenses for individuals and families. You may be able to cut your mortgage costs with a few steps such as, increasing the amount of payments or by making a lump-sum payment each year (prepayment) in addition to your regular payments. These steps can help decrease the number of mortgage payments and reduce the amount of time you need to pay a mortgage. Before considering a second property it may be helpful to build a full financial picture by creating a balanced budget to help control your cash flow by not spending more than you earn.

We are not able to provide advice but try to provide general information to help you take the next step. Visit GetSmarterAboutMoney.ca to learn about investing and other financial topics including, getting a mortgage approved and understanding real estate investments. Speak with a registered financial representative for investment advice that fits your personal situation.

Feb 06, 2019
Basics, Life events,

“I am getting my pension and have room left in my RRSP, can I still contribute and get a refund?”

Submitted by: Gail B.

Thank you for submitting your question to Re: Investing.

A Registered Retirement Savings Plan (RRSP) is an account, registered with the federal government, that you use to save for retirement. Anyone who files an income tax return with earned income and available contribution room can contribute to an RRSP (refunds depend on your current financial and tax situation). However, you must stop contributing to and close your RRSP by the end of the year you turn 71 by either withdrawing your RRSP savings in cash, converting your RRSP to a RRIF or buying an annuity. All RRSP withdrawals are subject to tax, as contributions are made with pre-tax dollars.

We are not able to provide advice but try to provide general information to help take the next step. Visit GetSmarterAboutMoney.ca to learn about investing and other financial topics. Speak with a registered financial representative or tax professional for advice that fits your personal situation.

Feb 06, 2019
Basics, Products,

“I want to invest within my RRSP, do risk-free investments exist?”

Submitted by: Raj

Thank you for submitting your question to Re: Investing.

All investments carry varying degrees of investment risk including those held within an RRSP. The value of an investment may go up or down depending on market conditions. While all investments carry risk, GICs and bank deposits for example, are considered lower risk compared to bonds or stocks. Understanding the relationship between risk and return and methods that may help to reduce overall investment risk such as, diversification are important to consider as you move forward.

Visit GetSmarterAboutMoney.ca to learn about RRSPs and how risk can affect your investment returns. Speak with a registered financial representative for advice that fits your personal situation.

Feb 06, 2019
Basics, Products,

“How do I initiate the transfer of funds from my RRSP’s to a RRIF?”

“Can I close a Registered Education Savings Plan (RESP)?”

Submitted by: Samah

Thank you for submitting your question to Re: Investing.

When you decide to close a Registered Education Savings Plan (RESP), the money in the RESP is returned to contributors (e.g. you, the government if applicable).

Your contributions into the RESP are returned to you and you don’t pay tax on contributions that are withdrawn net of any applicable fees.
Government contributions such as the Canadian Education Savings Grant (CESG) or the Canadian Learning Bond (CLB) are returned to the government because these funds are intended to be used to pay for post-secondary education.
You may be able to get investment earnings out of the plan if it has been open for 10 years and the beneficiaries have not pursued an education by the time they are 31 years old but any earnings are subject to tax plus a penalty. With a group RESP you don’t get back your investment earnings.

Visit GetSmarterAboutMoney.ca to learn about how RESPs work and other options should your child decide not to pursue higher education. Speak with a registered financial representative or tax professional for advice.

Feb 04, 2019
Basics, Products,

“How do I transfer my RRSP to a different institution?”

Submitted by: Pam R.

Thank you for submitting your question to Re: Investing.

You are able to transfer an RRSP to a different financial institution by authorizing the transfer of your funds. You can initiate the transfer through the receiving financial institution. One or both of the financial institutions involved may charge you a transfer fee. This previous Re: Investing question may help you take the next step.

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

Visit GetSmarterAboutMoney.ca to learn about RRSP transfers and other investing topics. Speak with a registered financial representative for advice.

Feb 04, 2019
Basics, Products,

“Can I transfer a LIF back to a LIRA”

Submitted by: Lynn D.

Thank you for submitting your question to Re: Investing.

Generally, there is not a way to transfer a LIF back to a LIRA. 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, LIRAs, and LIFs. You can learn more about the rules surrounding these insurance products on FSCO’s website.

For more information about LIRAs, contact FSCO.

Feb 01, 2019
Basics, Products,

“Can international students purchase GICs?”

Submitted by: Temilolu

Thank you for submitting your question to Re: Investing.

If you’re currently studying in Canada, there are many investment options available to you including different types of GICs. If you are planning to study in Canada, you must demonstrate they you have the means to support yourself in Canada. One of the ways may be through a Guaranteed Investment Certificate from a participating Canadian financial institution.

Please contact a Canadian financial institution for more information

Jan 31, 2019
Basics, Products,

“How much interest should I expect to earn in a savings account?”

Submitted by: Marilyn M.

Fees, features and interest rates vary from account to account. Shop around and compare options before choosing an account.

Generally, there are 3 types of accounts to consider, regular savings accounts—usually earn a small amount of interest, combined chequing and savings accounts—usually earn less interest than a regular savings account but more than in a chequing account and provide the ability to write cheques and finally, a high interest savings account—earns a greater amount of interest than in other types of savings accounts but may have minimum deposit requirements.

These previous Re: Investing questions may help to provide additional insight to help take the next step.

Visit GetSmarterAboutMoney.ca to learn about investing, saving money and other financial topics. Speak with a registered financial representative for advice to fit your personal situation.

Jan 25, 2019
Basics, Products,

“What happens to real estate property if you die without a will?”

Submitted by: Justin

A valid will establishes how the deceased’s estate is to be distributed upon death. If death occurs without a valid will, the person has died “intestate” meaning they have died without establishing instructions of how to distribute their estate. In this eventuality, the deceased’s property is divided to surviving relatives according to Ontario’s Succession Law Reform Act.

We are not able to provide financial or legal advice. For more information on wills and estates, please visit the Ministry of the Attorney General website. You can also speak to a tax professional or estate lawyer for advice related to the handling of an estate.

Jan 25, 2019
Basics, Regulation and policy,

“Can I defer setting up a RRIF until my spouse turns 71?”

Submitted by: Charles W.

Thank you for submitting your question to Re: Investing.

The Canada Revenue Agency requires you to open a Registered Retirement Income Fund (RRIF) no later than the end of the year you turn 71. If your spouse is younger than you, you can make your RRIF last longer by using their age rather than yours to calculate your minimum annual withdrawal. If you choose this option, you will need to tell your financial institution that you’re doing so, and you can’t change your mind later.

We are not able to provide financial advice. Speak to a registered investment representative or tax professional for advice on the best option for you.

Jan 24, 2019
Basics, Life events,

“Are segregated funds a qualified investment for a Registered Disability Savings Plan?”

“Can I take out a guaranteed investment at any time?”

Submitted by: Luc

Thank you for submitting your question to Re: Investing.

Guaranteed investments like GICs are one of the safest ways to invest as you are guaranteed to get your deposited amount back at the end of the term. GICs are offered in two variations—redeemable which allow you to get your money back at any time with no penalty or non-redeemable where you will have to pay a penalty if you need to get your money back sooner.

Before investing, fully review all investment terms and decide where to hold your investment(s) such as within an RRSP, RRIF or TFSA. Visit GetSmarterAboutMoney.ca to learn more about investing and various investment products. Speak with a registered financial representative for advice to fit your personal situation.

Jan 11, 2019
Basics, Products,

“Can I transfer money from a mutual fund to a GIC?”

Submitted by: Martial L.

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. Speak with a registered financial representative for investment advice.

Jan 11, 2019
Basics, Products,

“How do I buy stocks of a company?”

Submitted by: François

Thank you for submitting your question to Re: Investing.

There are many ways to invest in a company depending on how it is structured and whether it is a publicly-traded company or not. The most common way to invest in a company is to buy its shares traded on a stock exchange.

The stock market brings together people who want to sell stock with those who want to buy stock. When you buy share (also called stock) in a company, you receive a piece of the company and become a part owner.

You can learn more about buying and selling stocks here.

Jan 11, 2019
Basics,

“Will the entire management fee apply if I buy mutual fund units near the end of the year?”

Submitted by: Annette C.

The Net Asset Value (NAV) of a mutual fund is the price at which units of a mutual fund are bought or sold after deducting all expenses. Management fees and operating expenses make up a mutual fund’s management expense ratio (MER) which is expressed as a percentage per year. In practice, the MER is calculated and charged to the mutual fund daily. While you don’t pay these expenses directly, the MER is deducted from the total value of the mutual fund’s portfolio before the NAV is calculated.

You can find information about fees in a mutual fund’s Fund Facts and in its simplified prospectus. By law, a mutual fund company must prepare and file these disclosure documents with the securities regulator.

Visit GetSmarterAboutMoney.ca to learn about mutual funds and use the mutual fund fee calculator to see how fees and other costs affect your mutual fund investments. Speak with a registered financial representative for advice to fit your personal financial situation.

Jan 11, 2019
Basics, Regulation and policy,

“What happens to my DB pension if I die before retirement?”

Submitted by: Gary P.

In most cases, your spouse (or your beneficiary or estate if you don’t have a spouse) will be entitled to the cash value of the pension benefits you earned to your date of death.

If the benefits are going to your spouse, they may be able to receive them as a deferred pension or transfer the amount directly to their own RRSP or LIRA tax-free. Otherwise, payments are made in cash and are taxable.

Your plan administrator can help you understand the process and designate a beneficiary for your plan, if you wish to do so.

Learn more at our Pension & savings plans hub.

Jan 04, 2019

“Can I borrow funds from my RRSP?”

Submitted by: Ryan H.

There are two ways to borrow money from your RRSP tax-free: the Home Buyers’ Plan (HBP) and the Lifelong Learning Plan (LLP).

The HBP allows you to borrow up to $25,000 if you are building or buying a qualifying home subject to certain conditions. The LLP allows you to borrow $20,000 to pay for full-time or part-time education or training expenses subject to certain conditions. The HBP and LLP require repayments to your RRSP within certain timeframes.

If neither the HBP nor LLP apply to your situation, you can still withdraw money from your RRSP, but you will pay an immediate tax (withholding tax) on the money you take out, and possibly more at tax time. And you’ll permanently lose the contribution room you originally used to make the contribution. Learn more on our Making RRSP withdrawals before you retire article.

Jan 04, 2019
Products,

“How can I predict a stock market correction?”

Submitted by: Alfredo T.

Predicting exactly how the stock market will perform including the timing of a possible market correction can be very difficult, if not impossible. There are many factors that could influence the stock market, both directly and indirectly.

Our Factors that can affect stock prices article provides more information on some of the factors that can influence stock price including interest rates and economic outlook. Investor sentiment or confidence can also influence how the market performs. Visit our Stocks hub to learn more.

Jan 04, 2019
Basics,

“Can I transfer money from my RRSP into my spouse’s Defined Benefit Pension Plan?”

Submitted by: Carman M.

Thank you for submitting your question to Re: Investing.

There is not a mechanism to transfer funds from an RRSP to a Defined Benefit Pension Plan. However, some pension plans allow employees to make additional voluntary contributions. Speak with the Pension Plan administrator to see if they are eligible to make additional contributions.

In some cases, if an employee leaves an employer, pension funds can be transferred into a new employer’s pension plan or into a registered plan such as, an RRSP.

To learn more about Defined Benefit Pension Plan and other financial topics visit GetSmarterAboutMoney.ca. Speak with a registered financial representative or tax professional for advice that fits your personal situation.

Dec 28, 2018
Basics, Products,

“What happens when my financial representative changes companies?”

Submitted by: Charles C.

Thank you for submitting your question to Re: Investing.

Depending on the type of investments held in your account, you can request to transfer the investments to a new investment firm or can keep your investment account with your existing firm. Transfers may create a taxable event or be subject to fees.

A new representative will likely be assigned to you to work with, know what to expect from a representative and how to choose one that fits your goals. Before acting, speak with your current firm and any potential new firm to understand the options available. Check with a registered financial representative or tax professional for advice than fits your personal situation.

Visit GetSmarterAboutMoney.ca to learn more about investing and getting advice.

Dec 28, 2018
Basics, Services,

“Are there any fees or MERs on specialty funds?”

Submitted by: Sierra

Thank you for submitting your question to Re: Investing.

Specialty funds are a type of mutual fund that focuses its investing activities within a specific industry or sector. MERs can range from less than 1% to more than 3% and while you don’t pay these expenses directly, they affect you because they reduce the fund’s returns. This can add up over time.

When selecting a mutual fund it’s important to understand the types of fees that affect your investments. Carefully review the fees and expenses of any funds you are considering, even for no-load funds. You can find information about fees in a mutual fund’s Fund Facts and in its simplified prospectus. It may be helpful to learn more about disclosure documents and the mutual fund fee calculator may also provide insight on how fees impact your investments over time. Speak with a registered financial representative for investment advice.

Dec 28, 2018
Basics, Products,

“Can I gift an investment?”

“How do annuities work?”

“How does a spousal RRSP work?”

Submitted by: Sasha

Thank you for submitting your question to Re: Investing.

A spousal RRSP is registered in the name of your spouse or common-law partner. They own the investments in the RRSP, but you can contribute to it. You get the tax deduction for any contributions made to a spousal RRSP but 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.

Visit GetSmarterAboutMoney.ca to learn more about RRSPs. Speak with a registered financial representative or tax professional for advice to fit your personal situation.

Dec 20, 2018
Basics,

“What rate of return can I expect within an RRSP?”

Can I buy a stock, keep it for years and withdraw the profits when I want, or do I have to sell a stock to withdraw my earnings from it?

Submitted by: Jamie

Thank you for submitting your question to Re: Investing.

If you own a stock that has appreciated in value (capital appreciation), you must sell it in order to realize the gain. If you own a stock that provides dividends, you may continue to hold the stock for as long as you like and use the dividends as you wish.

You can learn more about how stocks work by visiting our consumer website, GetSmarterAboutMoney.ca. Speak with a registered financial representative for investment advice.

Dec 20, 2018
Basics,

“What happens to dividends earned in a TFSA?”

Submitted by: Shirley D.

Thank you for submitting your question to Re: Investing.

Generally, any dividends, interest or capital gains from an investment held in a TFSA is not taxed and you may also withdraw them without being taxed. However, there are some exceptions such as dividends from foreign stocks which could be subject to taxes.

For more information about TFSAs, visit our TFSA hub on GetSmarterAboutMoney.ca.

You may also wish to talk to a tax professional for advice specific to your situation.

Dec 20, 2018
Basics, Products,

“Why do some companies offer pension plans?”

Submitted by: Steve

Thank you for submitting your question to Re: Investing.

An employer may offer a pension plan if it is in a financial position to do so. Some employers offer a pension plan to help attract new employees and retain its existing workforce. Employers invest in their employees in many ways and offering a pension plan is one way to ensure financial well-being.

Pension plans are designed solely to provide retirement income, so you can only receive income (or make withdrawals) from these plans during retirement, typically from age 55 onward. If your employer offers an pension plan, here are 4 reasons to join it. You can learn more about pensions by visiting our Pension & Savings plans hub.

Speak with a registered financial representative for personalized financial advice.

Dec 20, 2018
Basics,

“What investments should I hold in my RESP?”

Submitted by: Julie

Thank you for submitting your question to Re: Investing.

You may hold many types of investments in your RESP including GICs, stocks including ETFs, mutual funds, and bonds. However, the type of RESP account you have may restrict the kinds of investments you can hold. You should also know that some plan providers will make the investment decisions for you.

Learn more about some common investments products available.

You may wish to speak to a financial representative to help explore options that fit your personal circumstances and financial goals.

Dec 20, 2018
Basics,

“What is a REIT?”

Submitted by: Alphy

Thank you for submitting your question to Re: Investing.

Real Estate Investment Trusts, or “REITS,” are companies that own real estate. REITs typically own large-scale properties like office buildings, shopping malls, hotels, warehouses and apartments. Unlike other real estate companies, REITs typically do not develop real estate properties to resell, but rather purchase properties to own and often operate.

Speak with a registered financial representative for investment advice.

Dec 20, 2018
Basics, Products,

What is the difference between common shares and preferred shares?

Submitted by: Alphy

Thank you for submitting your question to Re: Investing.

There are two main types of stocks: common and preferred.

The majority of stocks sold are common stocks. Common stock offers the potential for growth through rising share prices and increasing dividends. Owning a company’s common stock will also generally allow you to vote on corporate issues like board elections. If the company becomes bankrupt, common stock owners are typically last in priority to get their money back, if any remain. Preferred stock offers regular income through fixed dividends and the potential for growth through rising share prices. The prices of preferred stock tend to be more stable than the prices of common stock. Preferred stock holders typically do not have voting rights. If the company becomes bankrupt, preferred stock owners may redeem their shares before common stock owners if there are funds available.

Speak with a registered financial representative for investment advice.

Dec 20, 2018
Basics,

“What are equity mutual funds?”

Submitted by: Alphy

Thank you for submitting your question to Re: Investing.

An equity mutual fund primarily invests in a broad mix of stocks. Equity mutual funds can help you diversify your investment portfolio since the fund will hold many different stocks at the same time.

There are many different kinds of equity mutual funds. Some may invest in only large, medium or small companies, while others may focus on certain industries or sectors. There are also funds that will invest in multiple industries or sectors, and funds that will follow the performance of a specific stock exchange or index.

Before investing in a mutual fund, take a moment to review the fund’s objectives and risks by reading the Fund Facts document. Speak with a registered financial representative for investment advice.

Dec 20, 2018
Basics, Products,

“Can I open an RESP in any province in Canada?”

Submitted by: Pratap S.

Thank you for submitting your question to Re: Investing.

You may open an RESP in any province in Canada. You will need your social insurance number to open an RESP. Your child or other beneficiaries will also need social insurance numbers and must be Canadian residents. Take a look at these 6 steps to opening an RESP.

Some provinces offer grants or incentives in addition to federal programs. To qualify for provincial programs, you must meet certain requirements like residency in the province. If such a program exists in your province, we recommend you review the program eligibility requirements and whether you and your children meet them.

Dec 20, 2018
Basics,

“What is the difference between a GIC and a Treasury Bill?”

Submitted by: Jason N.

Thank you for submitting your question to Re: Investing.

Treasury Bills (T-bills) and GICs are both fixed term low-risk investments. When you buy a GIC, you are agreeing to lend a bank or financial institution your money for a set term (in months or years) and are guaranteed to get the amount you deposited back with a fixed yield at the end of the term. When you purchase treasury bills (T-bills) you lend money to the federal or provincial government for a set term but unlike GICs T-bills do not pay interest, they are purchased below what the government will give you at the end of the term.

When comparing short-term investments such as GICs and T-bills compare offered rates as well as any investment requirements such as, any initial investment amounts or penalties for redeeming the investment early.

Visit GetSmarterAboutMoney.ca to learn about how GICs and bonds work. Speak with a registered financial representative for advice that fits your personal financial situation.

Dec 20, 2018
Basics,

“Can I transfer mutual funds into my RRSP?”

Submitted by: Katey S.

Thank you for submitting your question to Re: Investing.

You can transfer qualified investments, such as stocks, bonds or mutual funds from a non-registered account to your RRSP as a transfer “in kind” providing there is sufficient contribution room.

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.

Visit GetSmarterAboutMoney.ca to learn about RRSPs and RRSP transfers. Speak with a registered financial representative or tax professional for advice.

Dec 20, 2018
Basics, Products,

“Can I open a RESP for my grandchildren?”

Submitted by: Paul H.

Thank you for submitting your question to Re: Investing.

Yes, you can open and contribute to a RESP where your grandchildren are named as a beneficiary. This can help with their education costs when they enroll in post-secondary education where they can start taking payments, called educational assistance payments (EAPs). Be aware, if they don’t continue their education post high school while options are available, there may be financial costs and tax consequences.

Visit GetSmarterAboutMoney.ca to learn about how RESPs work, the types of RESPs available and you may find it helpful to use the RESP Savings Calculator to figure out how much you need to save each year for your grandchild’s education. Speak with a registered financial representative or tax professional for advice as you move forward.

Dec 20, 2018
Basics, Products,

“I received a GIA maturity notice, what do I do with it?”

Submitted by: Andre M.

Thank you for submitting your question to Re: Investing.

Guaranteed interest annuities (GIAs) work similarly to GICs, but are life insurance contracts. Generally, notice is provided when your contract is close to its maturity. This is to provide the opportunity for reviewing available options and deciding how to proceed going forward, either by renewing your contract under existing terms (if possible) or different terms, or by redeeming the matured amount.

To learn about what to consider when buying GIAs or other investment products visit GetSmarterAboutMoney.ca. Speak with a registered financial representative or tax professional for advice to fit your personal situation.

Dec 20, 2018
Basics, Products,

“Will my spouse pay tax on my TFSA earnings when I die?”

Submitted by: Alice B.

Thank you for submitting your question to Re: Investing.

A successor holder can be named to a Tax-Free Savings Account— either a spouse or common-law partner.

Upon the death of the TFSA holder, the TFSA passes to the successor holder designate who becomes the new account holder. Generally, the successor holders’ contribution room will not be affected by this process. There may be tax implications for the successor holder of a TFSA. If a successor holder is not named, the probate process shall govern the settlement of the account including any tax implications.

To learn about TFSAs and retirement planning visit GetSmarterAboutMoney.ca. Speak with a registered financial representative or tax professional for advice to fit your personal financial goals and situation.

Dec 20, 2018
Basics, Products,

“Can an RRSP be opened for a minor?”

Submitted by: Stuart

Thank you for submitting your question to Re: Investing.

There is not a minimum age requirement to open an RRSP (a letter of consent may be required from a legal guardian who will have signing authority until the minor turns of legal age) however, earned income must be present to be able to generate contribution room. If earned income falls below the basic personal amount ($11,809 for 2018) filing a tax return may still be beneficial to start the accumulation of RRSP contribution room.

To learn about RRSPs and retirement planning visit GetSmarterAboutMoney.ca. Speak with a registered financial representative or tax professional for advice to fit your personal financial goals and situation.

Dec 20, 2018
Basics, Products,

“Can I withdraw from my RRSP when on disability?”

“Will I lose my CPP disability benefits if I withdraw money from my pension?”

Submitted by: Shawn

Thank you for submitting your question to Re: Investing.

The Canada Pension Plan (CPP) is a Government of Canada program. Questions regarding your specific file should be directed to Employment and Social Development Canada (ESDC).

Generally, with CPP disability benefits you can volunteer, attend school, or upgrade your skills without affecting your CPP disability benefits. However, you may need to notify Service Canada around certain activities such as, exceeding the yearly maximum amount of earnings.

To learn about retirement planning visit GetSmarterAboutMoney.ca. Speak with a registered financial representative or tax professional for advice to fit your situation.

Dec 20, 2018
Basics, Regulation and policy,

“How do I determine where to invest my money?”

“Can I rollover tax free from my RRSP to my child’s RRSP?”

Submitted by: Ronald

Thank you for submitting your question to Re: Investing.

You can’t transfer money from your Registered Retirement Savings Plan (RRSP) to the RRSP of someone else including, transfers to a spousal RRSP, or that of your children. Doing so can have tax consequences.

There is not a minimum age requirement to open an RRSP, provided that the account holder has earned income, a valid social insurance number and has filed tax returns to start building contribution room. It may be possible, to gift cash to your child to contribute to an RRSP, provided that there is sufficient contribution room.

We are not able to provide advice, but we try to provide general information to help you take the next step. Speak to a registered financial advisor or tax professional for advice on available options.

Learn more about RRSPs and by visiting GetSmarterAboutMoney.ca.

Dec 20, 2018
Basics, Products,

“Can I gift my RRIF to my adult children?”

Submitted by: Sorin I.

Thank you for submitting your question to Re: Investing.

There are two key decisions to think about when making withdrawals from your RRIF, the amount to take out, and when. All withdrawals, including the minimum amount are subject to tax.

A RRIF is designed to provide you with steady stream of retirement income and while there is a minimum annual withdrawal (based on your age) there is not a maximum. It may be beneficial to learn what happens to your RRIF when you die including, the taxes on it — which depend on whether or not you name, and who you choose as a beneficiary.

Before taking action understand the implications of all withdrawal scenarios, before and after death. Speak with a registered financial representative or tax professional for advice that fits your financial goals and situation.

Learn more about RRIFs and Living your retirement by visiting GetSmarterAboutMoney.ca.

Dec 20, 2018
Basics, Products,

“I’m a DIY investor, why does my mutual fund pay trailer fees?”

Submitted by: GG

Thank you for submitting your question to Re: Investing.

Trailing commissions (or trailing fees) are a payment of money that is part of a continuing series of payments to a participating dealer. Payments may vary depending on the mutual fund series invested in (denoted by a letter — for example, Series D). These payments are intended to cover services of any kind in connection with a client’s ownership of mutual fund securities. Not every fund pays trailing commissions, but some do.

Read a mutual fund’s disclosure documents — located in a mutual fund’s Fund Facts and in its simplified prospectus — to understand the series of fund and associated fees and expenses before making an investment decision.

The resources on GetSmarterAboutMoney.ca will help to build knowledge in this and other areas including, how fees and other costs can affect your investment. Speak with a registered financial representative or tax professional for personalized advice.

Dec 17, 2018
Basics, Products,

“Why do different institutions offer different interest rates?”

Submitted by: Edward J. T.

Thank you for submitting your question to Re: Investing.

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

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

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

Nov 15, 2018
Basics, Products,

“How do I participate in a mutual fund?”

“Can I cash out my segregated fund?”

Submitted by: Sheri

Thank you for submitting your question to Re: Investing.

Yes, you can cash out of your segregated fund.

Segregated funds are individual insurance contracts that invest in one or more underlying assets, such as a mutual fund but unlike mutual funds, segregated funds provide a guarantee to protect part of the money you invest.

If you cash out before the maturity date, the guarantee won’t apply. You’ll get the current market value of your investment, less any fees. This may be more or less than what you originally invested and may trigger a tax event.

Speak to a registered financial representative or licensed insurance agent for advice about the options that fit your investment plan.

Nov 15, 2018
Basics, Products,

“How can I get started with investing?”

“What happens to my RRIF when I die?”

Submitted by: Glen

Thank you for submitting your question to Re: Investing.

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

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

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

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

Nov 15, 2018
Basics, Products,

“How do I open an RRSP?”

“What are futures?”

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

Submitted by: Sheila

Thank you for submitting your question to Re: Investing.

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

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

Nov 13, 2018
Basics, Products,

“Are risk and return related?”

Submitted by: Pearl

Thank you for submitting your question to Re: Investing.

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

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

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

Nov 13, 2018
Basics,

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

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

Submitted by: Kris

Thank you for submitting your question to Re: Investing.

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

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

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

Nov 13, 2018
Basics, Life events,

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

Submitted by: Jody

Thank you for submitting your question to Re: Investing.

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

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

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

Nov 09, 2018
Basics, Life events,

“Is investing in a cannabis company risky?”

Submitted by: Charles

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

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

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

Nov 09, 2018
Basics,

“How does a mortgage work?”

“Can I buy stock in an RRSP?”

Submitted by: Rilf

Thank you for submitting your question to Re: Investing.

Yes, you can buy and hold stocks in an Registered Retirement Savings Plan (RRSP) providing it is considered a qualified investment by Canada Revenue Agency (CRA). Funds held within an RRSP can grow tax free until withdrawn where it is taxed accordingly.

We are not able to give financial, tax or legal advice however, it may be of interest to learn how RRSPs and self-directed RRSPs work. The resources available on GetSmarterAboutMoney.ca may help to build your knowledge on this and other topics.

Speak with a registered financial representative or mortgage broker for further advice.

Nov 09, 2018
Basics, Products,

“How do you transfer between TFSAs without penalty?”

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

Submitted by: Mike R.

Thank you for submitting your question to Re: Investing.

We are not able to provide financial, tax or legal advice however, we always try to provide general information to help you determine the next step. If you receive interest, dividends or capital gains from investments outside Canada, the equivalent Canadian dollar value must be reported on your Canadian tax return and will be taxed accordingly.

A withholding tax may be deducted from your foreign investment income. However, you may be able to claim a foreign tax credit to prevent double taxation. Speak with a registered financial representative or tax professional for advice.

Oct 22, 2018
Basics, Regulation and policy,

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

Submitted by: Chris

Thank you for submitting your question to Re: Investing.

RESPs and RRSPs offer different ways of saving for two different purposes. A Registered Education Savings Plan (RESP) is a dedicated savings plan to help you save for a child’s education after high school whereas a Registered Retirement Savings Plan (RRSP), also a savings plan registered with the federal government, is used to save for retirement. These two savings plans are independent of each other.

Visit the RESP hub and RRSP hub on GetSmarterAboutMoney.ca to learn more about these and other ways to save. Speak with a registered financial representative for further advice.

Oct 22, 2018
Basics, Products,

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

Submitted by: Wendy

Thank you for submitting your question to Re: Investing.

Business titles in the investment industry can be confusing. In Canada, financial planners hold many different titles and designations one of them being, CFP (Certified Financial Planner). Regardless of title remember, any individual who sells investments or provides investment advice must be registered with the securities regulator where they sell or provide advice. In Ontario, it’s simple to check before you invest.

The resources on GetSmarterAboutMoney.ca may help you build your financial and investing knowledge.

Oct 22, 2018
Basics, Regulation and policy,

“Do brokers hold an inventory of stocks?”

Submitted by: Victor B.

Thank you for submitting your question to Re: Investing.

When you buy or sell stocks you place your order with instructions on which stock(s) you wish to buy. Generally, you’ll pay a commission each time you buy or sell a stock.

Resources on GetSmarterAboutMoney.ca including, stock market basics may be helpful to build your knowledge and understanding on this topic. Speak with a registered financial representative for advice.

Oct 22, 2018
Basics,

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

Submitted by: Johanna

Thank you for submitting your question to Re: Investing.

A Registered Retirement Income Fund (RRIF) is an account registered with the federal government that is designed to provide you with steady income in retirement. Like RRSPs you can hold many different investments within a RRIF such as, stocks, bonds, mutual funds, ETFs, GICs etc. All investments, including those held within an RRIF, come with a degree of risk, this previous Re: Investing question may be helpful.

“Are there risks when investing within an RRSP?”

Visit the RRIF hub on GetSmarterAboutMoney.ca to learn more about RRIFs and other investing topics. Speak with a registered financial representative for investment advice.

Oct 22, 2018
Products,

“Do ETFs fluctuate in a recession?”

Submitted by: Frank B.

Thank you for submitting your question to Re: Investing.

Exchange-traded funds (ETFs), like any investment carry risk. By design, ETFs like mutual funds offer a unique way to spread out (or diversify) risk. However, unlike mutual funds, ETFs are purchased on a stock exchange rather than through a mutual funds dealer.

Learn more about how ETFs work and visit the ETF hub on GetSmarterAboutMoney.ca for additional knowledge on the topic. Speak with a registered financial representative for personalized investment advice.

Oct 22, 2018
Basics, Products,

“How do joint annuities work?”

Submitted by: T C.

Thank you for submitting your question to Re: Investing.

Joint-and-last-survivor benefit is an annuity that pays income to you and your spouse for life. Even if you die, your spouse will continue to receive income. The terms of an annuity are affected by a number of factors including, your age.

The annuities hub on GetSmarterAboutMoney.ca may be helpful to build your knowledge and understanding on the topic. Speak with a registered financial representative for personalized advice.

Oct 22, 2018
Basics, Products,

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

Submitted by: Arthur P.

Thank you for submitting your question to Re: Investing.

You can transfer cash and investments between RRSPs you hold at the same or different financial institutions. It may be wise to verify with both institutions if there are transaction fees.

The RRSP hub on GetSmarterAboutMoney.ca may help build your knowledge in this area. Consider speaking with a registered financial representative or tax professional for further investment advice.

Oct 22, 2018
Basics, Products,

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

Submitted by: Anne F.

Thank you for submitting your question to Re: Investing

When you withdraw funds from your RRSP or RRIF, in most cases, you will trigger a tax event given the special tax status of registered accounts. The dividend tax credit is a non-refundable tax credit that applies when Canadian dividends are included as part of your taxable income.

You may find the retirement planning and understanding tax hubs on GetSmarterAboutMoney.ca helpful to build your knowledge in these areas. We encourage you to speak with a registered financial representative or tax professional for tailored investment advice.

Oct 17, 2018
Basics, Products, Regulation and policy,

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

Submitted by: Eleana M.

Thank you for submitting your question to Re: Investing.

When evaluating your investment options carefully review the fees and expenses of any funds you are considering and ask questions before you buy or make a change. Additionally, our mutual fund fee calculator shows the impact of fees on your investments. It may also be useful to review Fund Facts – an interactive sample of the key information mutual fund companies are required to provide investors who purchase the mutual fund.

To continue learning about mutual funds visit the mutual funds hub on GetSmarterAboutMoney.ca. Speak with a registered financial representative to help with your decision-making process.

Oct 17, 2018
Basics, Products,

“Are there risks when investing within an RRSP?”

Submitted by: Tony

Thank you for submitting your question to Re: Investing.

All investments, including those held within an RRSP, come with a degree of risk. The value of your RRSP may go down as well as up, depending on the investments it holds and market conditions. As an investor, it is important to understand your own tolerance to risk, why risk matters and the relationship between risk and return.

Please speak with a registered financial representative to better understand how an RRSP may fit within your investment needs.

Oct 17, 2018
Basics, Products,

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

Submitted by: Rachel T.

Thank you for submitting your question to Re: Investing.

Money held within 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.

There are tax considerations if you’re thinking of moving stocks to a TFSA and be aware, there are penalties for exceeding your contribution limit which you may check by using the CRA’s My Account or by calling the Tax Information Phone Service (TIPS).

It may be beneficial to speak with a registered financial representative for tailored advice.

Oct 16, 2018
Basics, Products,

“What ETF’s can I trade in my TFSA?”

Submitted by: Don

Thank you for submitting your question to Re: Investing.

A Tax-Free Savings Account (TFSA) can hold a variety of investments, such as GICs, mutual funds, ETFs and individual stocks. Any investment held within a TFSA must be considered a qualified investment according to Canada Revenue Agency (CRA).

While we try to provide as much information as we can, we are not able to provide investment or financial advice. It may helpful to review how TFSAs, and ETFs work, in addition to related risks. For additional resources, please visit the ETF hub on GetSmarterAboutMoney.ca.

Oct 17, 2018
Basics, Products,

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

Submitted by: Wilhelmina L.

Thank you for submitting your question to Re: Investing.

A representative at a bank, trust company, or registered investment firm can help you open a Tax-Free Savings Account (TFSA). You may also find it helpful to visit the TFSA hub on GetSmarterAboutMoney.ca that contains all of our resources on TFSAs including the 4 reasons to open a TFSA, how TFSAs work and a TFSA calculator to help save for any goal.

To learn more about how TFSAs can fit within your retirement plan, speak to a registered financial representative.

Oct 17, 2018
Basics, Products,

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

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

Submitted by: David B.

Registered Retirement Savings Plan (RRSP) deduction limits or “contribution room” can be found on your latest notice of assessment or notice of reassessment. TFSA contribution room is limited to the maximum annual contribution limit including any carried over amount.

To view your latest notice of assessment or reassessment and check your TFSA contribution limits, you may use the CRA’s My Account or by calling the Tax information Phone Service (TIPS).

Learn about contributing to registered accounts by visiting the RRSP and TFSA contributions page on GetSmarterAboutMoney.ca

Oct 11, 2018
Basics, Products,

“Can US equities be held in a RRIF?”

“How are investments taxed?”

Submitted by: Anna G.

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

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

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

Oct 10, 2018
Basics, Products,

“Can I income split my RRIF withdrawals?”

Submitted by: Paul

You may income split RRIF withdrawals on your tax return with your spouse if you are 65 or over. You and your spouse must meet certain conditions, such as being residents of Canada. You can find more information on pension income splitting requirements on the Canada Revenue Agency (CRA) website. For more information on RRIF withdrawals, take a look at our webpage, Making withdrawals from your RRIF on GetSmarterAboutMoney.ca

Oct 03, 2018
Life events, Regulation and policy,

“How are annuities protected?”

Submitted by: Joe B

If your annuity provider goes out of business, your annuity is insured up to certain limits. The first $2,000 per month of your annuity income is insured at 100%. Amounts above this are insured at 85% if the firm is a member of Assuris.

The insurance that covers your annuity is automatic. You don’t have to do anything, and you don’t have to pay extra to get it. To learn more about the specific protections your annuity, you may contact your annuity provider or Assuris.

Sep 28, 2018
Products,

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

Submitted by: Julien

When you name your spouse as a beneficiary of your RRIF, the rules also allow you to name your spouse as the “successor annuitant”.

If your spouse is the successor annuitant, your spouse takes over your RRIF and automatically starts receiving your RRIF payments.

If your spouse is not the successor annuitant, your RRIF will be collapsed and the investments sold. As the beneficiary, your spouse can have the money from your RRIF rolled over to their RRSP or RRIF

To learn more about RRIF beneficiaries, read this page from GetSmarterAboutMoney.ca.

You may wish to speak to a tax professional or financial representative for tax and estate planning advice.

Sep 19, 2018
Life events,

“How do I buy stocks within a RRIF?”

Submitted by: Joe

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

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

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

Sep 19, 2018
Basics, Products,

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

Submitted by: Jas

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

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

Sep 19, 2018
Products, Regulation and policy,

“How do I evaluate a stock?”

Submitted by: Vincent O.

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 when it comes to investing, as there is always some level of risk.

Here are 6 commonly used indicators but there are many other factors affecting stock prices that can’t be easily measured. While indicators can be useful to help you assess the value of a stock and its growth potential, you should know that investors and organizations may differ in the types of indicators they prefer to use and how they choose to interpret the information.

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

Sep 19, 2018
Basics,

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

Submitted by: Stephane L.

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

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

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

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

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

Sep 19, 2018
Regulation and policy,

“Should I open an RRSP or TFSA?”

Submitted by: Alanna

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

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

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

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

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

Sep 19, 2018
Basics, Products,

“What is a fee-based advisor?”

Submitted by: Dinnie

A fee-based advisor is paid through a combination of fees (paid by you) and commissions (paid by the firm they represent).

Other ways advisors are paid include salary, sales fees or commissions, and fee-only.

When choosing an advisor, it’s important to work with someone that meets your service expectations and understands your financial circumstances and goals. These 8 questions to ask an advisor can provide you with a starting point when deciding if someone is the right advisor for you. You can ask them how they are paid, and what services you will receive in return. To learn more about the impact of fees on investing, visit InvestmentReporting.ca.

Sep 19, 2018
Basics, Services,

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

Submitted by: Naheed G.

Financial institutions track and report your TFSA contributions to the Canada Revenue Agency (CRA). You do not report your TFSA contributions on your tax return.

To check your TFSA contribution room, you may use CRA’s My Account service online. The TFSA information reflects contributions and withdrawals made up to the date indicated by CRA. You should compare this information with your own records to ensure it is correct.

Learn more about TFSAs including contributions limits by visiting our TFSA basics page on GetSmarterAboutMoney.ca

Sep 19, 2018
Basics, Regulation and policy,

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

Submitted by: Ron S.

You may be able to transfer mutual funds from one financial institution to another. Some mutual funds are “proprietary” and only offered by certain financial institutions. If this is the case, you may not be able to transfer them without cashing them out. This can have tax consequences and may trigger fees.

You will need to consider how to transfer the mutual funds if they are held in an Registered Retirement Savings Plan (RRSP).

There may also be implications if they are held in a Tax-Free Savings Account.

Make sure you understand any fees that may be associated with the transfer before making a decision.

Speak to a financial representative before making a decision.

Sep 04, 2018
Basics, Regulation and policy,

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

Submitted by: Amanda

There are many ways you can start investing with smaller amounts. Before you start investing, create an investment plan, ask yourself these investing questions and remember to check registration.

Consider whether investing in mutual funds, GICs or ETFs as a starting point.

If you want to trade stocks you will have to contact investment firms that allow you to open an account and trade in smaller amounts. Make sure you understand the fees associated with these accounts. You will also want to know how to find information about the companies you are interested in investing in.

Find out more about working with an advisor.

Sep 19, 2018
Basics,

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

Submitted by: Rob P.

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

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

Sep 05, 2018
Products,

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

Submitted by: Michael

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

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

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

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

Sep 05, 2018

“Can I close my RRSP at any time?”

Submitted by: 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.

Sep 05, 2018
Products,

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

Submitted by: Gene E.

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

Sep 05, 2018
Products,

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

Submitted by: Diana B.

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

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

Sep 05, 2018
Basics,

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

Submitted by: 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.

Sep 05, 2018
Products,

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

Submitted by: 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.

Aug 30, 2018
Life events, Products,

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

Submitted by: Stephen

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

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

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

Aug 30, 2018
Basics,

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

Submitted by: 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.

Aug 30, 2018
Products,

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

Submitted by: Wanwenzeng

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

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

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

Aug 24, 2018
Basics,

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

Submitted by: Suzanne

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

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

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

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

Aug 24, 2018
Life events, Products,

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

Submitted by: 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.

Aug 24, 2018
Regulation and policy,

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

Submitted by: 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.

Aug 24, 2018
Basics, Products,

“What is the tax rate on foreign interest?”

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

Submitted by: Sivagobi T.

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

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

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

Aug 16, 2018
Basics,

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

Submitted by: 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.

Aug 16, 2018
Basics, Frauds and scams,

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

Submitted by: 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.

Aug 16, 2018
Products,

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

Submitted by: Janet

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

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

Aug 16, 2018
Products,

“Can you borrow from your RRSP?”

Submitted by: Heather L.

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

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

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

Aug 16, 2018
Products,

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

Submitted by: 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.

Aug 16, 2018
Products,

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

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

Submitted by: Lisa P.

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

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

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

Aug 02, 2018
Basics, Products,

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

Submitted by: Doug B.

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

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

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

Aug 02, 2018
Basics, Products,

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

Submitted by: Joseph

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

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

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

Aug 02, 2018
Life events,

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

Submitted by: 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.

Aug 02, 2018
Basics,

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

Submitted by: Tania

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

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

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

Jul 26, 2018
Products,

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

Submitted by: Roy B.

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

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

Jul 26, 2018
Life events, Products,

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

Submitted by: Oscar

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

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

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

Jul 26, 2018
Basics,

“Which offers higher returns? TFSA or RRSP?”

Submitted by: Loralie Y.

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

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

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

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

Jul 26, 2018
Basics, Products,

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

Submitted by: Bruce

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

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

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

Jul 26, 2018
Basics, Products,

“Who should be the beneficiary for my TFSA?”

Submitted by: Andrew

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

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

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

Jul 26, 2018
Life events, Products,

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

Submitted by: Amna S.

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

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

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

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

Jul 26, 2018
Basics, Products,

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

Submitted by: 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.

Jul 13, 2018
Products,

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

Submitted by: 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.

Jul 13, 2018
Products,

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

Submitted by: Dawn

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

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

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

Jul 13, 2018
Products,

“How do I compound my investments?”

Submitted by: 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.

Jul 13, 2018
Basics,

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

Submitted by: 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.

Jul 13, 2018
Products,

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

Submitted by: 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:

18% of your earned income for the previous year, or
the maximum contribution amount for the current tax year ($26,230 for 2018).

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.

Jul 13, 2018
Products,

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

Submitted by: Cary N.

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

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

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

Jul 06, 2018
Basics,

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

Submitted by: 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.

Jul 06, 2018
Products,

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

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

Submitted by: Michael

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

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

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

Jul 06, 2018
Basics, Products,

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

Submitted by: 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.

Jul 06, 2018
Products,

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

Submitted by: 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.

Jul 06, 2018
Basics,

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

Submitted by: 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.

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

Jun 26, 2018
Basics, Products,

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

Submitted by: 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.

Jun 20, 2018
Basics, Products,

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

Submitted by: Sorin I.

Fees associated with your Registered Retirement Income Fund (RRIF) vary depending on:

where you open your RRIF
the type of RRIF you hold
the amount of money in your RRIF
how you invest your money
the level of management you want.

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.

Jun 20, 2018
Basics, Products,

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

Submitted by: Shirley

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

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

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

Jun 20, 2018
Life events, Products,

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

Submitted by: 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.

Jun 20, 2018
Products,

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

Submitted by: Pawan

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

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

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

Jun 19, 2018
Basics, Life events, Products,

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

Submitted by: Pat S.

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

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

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

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

Jun 19, 2018
Basics, Products,

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

Submitted by: Nadia

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

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

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

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

Jun 19, 2018
Basics, Life events,

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

Submitted by: Marcia A.

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

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

Jun 19, 2018
Products,

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

Submitted by: 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.

Jun 19, 2018
Products,

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

Submitted by: Carolyn C.

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

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

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

Jun 19, 2018
Basics,

“Can index funds be purchased in Canada?”

Submitted by: Kaysy

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

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

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

Jun 19, 2018
Products,

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

Submitted by: Bob

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

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

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

Jun 19, 2018
Basics,

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

Submitted by: Andrea

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

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

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

Jun 19, 2018
Products,

“Can a TFSA be held jointly by spouses?”

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

Submitted by: Carol

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

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

Jun 07, 2018
Products,

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

Submitted by: Duncan K.

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

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

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

Jun 08, 2018
Regulation and policy,

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

Submitted by: 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.

Jun 08, 2018
Products,

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

Submitted by: 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.

Jun 08, 2018
Products,

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

Submitted by: 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:

where you open your RRIF
the type of RRIF you hold
the amount of money in your RRIF
how you invest your money
the level of management you want.

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.

Jun 07, 2018
Basics, Products,

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

Submitted by: 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.

Jun 07, 2018
Basics,

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

Submitted by: Shreejit R.

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

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

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

Jun 07, 2018
Basics,

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

Submitted by: 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.

Jun 07, 2018
Basics, Products,

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

Submitted by: Doug M.

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

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

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

Jun 07, 2018
Products,

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

Submitted by: Remo B.

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

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

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

May 31, 2018
Basics, Products,

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

Submitted by: Linda P.

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

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

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

May 31, 2018
Products,

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

Submitted by: Bryan

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

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

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

May 31, 2018
Basics, Services,

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

Submitted by: 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.

May 29, 2018
Basics, Life events,

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

Submitted by: 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.

May 28, 2018
Products, Regulation and policy,

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

Submitted by: Regiane M.

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

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

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

May 28, 2018
Basics, Products,

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

Submitted by: Lynn

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

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

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

May 28, 2018
Basics, Products,

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

Submitted by: John

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

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

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

May 28, 2018
Basics,

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

Submitted by: 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.

May 28, 2018
Basics, Regulation and policy,

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

Submitted by: 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.

May 28, 2018
Basics, Products,

“Who can invest in a hedge fund?”

Submitted by: Herman

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

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

Learn more about hedge funds on GetSmarterAboutMoney.ca.

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

May 28, 2018
Products, Regulation and policy,