Welcome to RRSP Season!

It is that time of year again when attention turns to RRSPs and tax planning. 

The purpose for making an RRSP contribution, from a financial planning perspective, is to build savings and assets over time so that you can replace earned employment income with passive or investment income for your retirement years. In other words, you can sleep in and still have the lifestyle you want without going to work!

The Canadian Government assists you with that objective. It does this by giving you a tax deduction for contributions so that you can save more money on a pre-tax basis than you would if the money was taxed and then saved. Secondly, it allows for the tax-free growth (tax deferral) on your RRSP so that the capital amount will be much greater than it would be if you were taxed annually on the growth or income.

Most people focus on the tax deduction only while ignoring the significant benefits of the compounding effects and growth on the money that is not paid out as taxes. The theory is that you are contributing money while in a higher income tax bracket during your working years and withdrawing it in your retirement years while you are in a lower tax bracket. The reality is higher income earners may find themselves in the same tax bracket in retirement!

This leads many people, including some accountants, to challenge the effectiveness of RRSP by saying: Why bother with an RRSP if you have to pay taxes on the withdrawal!? This viewpoint ignores the real power of tax-deferred compounded growth and the effects of compound growth that you can achieve in an RRSP, especially on the capital that would have otherwise been lost to income taxes.

The math works something like this. If you took the assumed future capital value of your RRSP at age 65 or 70 and then collapsed the RRSP (not recommended) and paid 50% of the capital as income taxes, the remaining capital would still be higher than if you had been building your savings outside the RRSP in a fully taxable environment.

Impossible you say! Take a calculator while watching TV and invest, say $10,000 a year, minus your annual income taxes, say 30%, then invest the balance of $7,000 at an assumed rate of growth, pick 5% to keep it simple, then subtract the taxes on the earned income $105. The net amount at the end of Year One is $7,245. Then do this another 39 times assuming the person is age 25.

Year One Effects of RRSP Investing

Compare this with the RRSP with $10,500 at the end of Year One. The gap only gets bigger over time!

Long Term RRSP Accumulation

There are situations where RRSP contributions may not be the right thing for some people some of the time. For example, young people at the start of their careers or low-income earners nearing retirement. A TFSA may be the better solution!

These are just two alternatives for building savings and assets something which you would still need to do even if RRSPs didn't exist. RRSPs just make it easier to build savings. Call us today to discuss more savings and tax planning strategies!

Refinancing...is it for you?

Canadians today face many reasons to refinance their mortgage. For example, you may have been working at improving your credit score and now qualify for a new mortgage with a better discount, or you may want to stabilize your payments by changing from a variable rate mortgage to a fixed-rate. Refinancing is also a good option to pull out equity for consolidating debt, home improvements, investments, college expenses, and more.

Refinancing isn't necessarily a bad thing or term

There are many things that play a role in whether or not refinancing is a good move.  The first thing is to determine what your overall goal is by refinancing.  It can answer many questions for you including providing you with these benefits.  Why do you want to refinance?

• Getting a rate that reduces your monthly payment while being low enough to offset the costs of refinancing is one common reason to refinance
• Paying down higher interest debts like credit cards or loans or lines of credit .
• Having your monthly payment reduce to help you pay off your mortgage quicker as your not incurring more debt but able to now focus on just paying the mortgage off
• Buying a rental property or 2nd home(cottage).
• Increase your quality of life now, maybe buying a boat or trailer for those family outings.
• Doing some investments and get a higher rate of return on your investments and borrowing the money at a lower rate for the mortgage.
• consolidate their high-interest debt to reduce their overall interest rate and free up hundreds of dollars in cash flow every month.
• Doing some much-needed renovations to your home using the existing equity to increase the value of your home it's a win-win.

Here is something most people don't know when considering when doing a refinance all costs can be included in the mortgage including lawyer fees and penalties. 

When done correctly, a refinance can save families money on long-term interest.

If you are curious to know how much can save if you refinance your mortgage this calculator will help you find out!. 

Dust N Shine Cleaning Services is a TRUSTED REGINA MAID AND CLEANING SERVICE.

General household cleaning tips!

2. When dishes come out of the dishwasher with residue, run an empty load with 1/2 cup of white vinegar in the detergent cup. Alternately, use several tablespoons of Tang, lemon-flavoured Kool-Aid or powdered laundry detergent for the same effect.

3. To combat grease buildup and maintain cleanliness, grind a handful of ice cubes in the garbage disposal every few weeks. Add the peels from lemons or limes to help eliminate odours. 

4. The anti-static component in dryer sheets helps break down the bond between food and pots and pans, so put a sheet in a dirty pot filled with water, soak it overnight, and easily scrub the pot clean the following day.

5. Keep shower doors clean by using a glass cleaner to initially remove streaks, and use a Magic Eraser to navigate the crevices of textured glass. Razor blades can scrape off the more challenging buildup. Dry the door, and then use a water-repellent product, such as Rain-X or Aquapel, to cause water to bead up and wash away from the glass. Wipe the repellent with a microfiber cloth, and repeat the process every six months.

 

Contact Dust N Shine for your free estimate today!

Dust N Shine Cleaning Services is a TRUSTED REGINA MAID AND CLEANING SERVICE.

Active Electric Regina Electricians get it right the first time, delivering all electrical services including installation, upgrade, and repair solutions. Active Electric are your TRUSTED REGINA ELECTRICAL EXPERTS

When you picture a counterfeit product, the first thing that probably comes to mind is money. Criminals try to pass off counterfeit bills for the real thing so they can purchase products and disappear without a trace. But did you know electrical products can be counterfeit as well? In fact, consumer electronics comprise the single largest category of counterfeit commodities seized by US customs, making up 22 percent of all items seized each year.

What makes an electrical product counterfeit, and how can you spot it? Use these tips any time you shop for electronics to protect your home and family from counterfeits.

What are Counterfeit Electrical Products?

When shopping for electronics, you may stumble across a product with a price far below what competitors are selling their products for. If this happens, you have probably spotted a counterfeit electrical product. Don’t be tempted to purchase the item just because it costs less. After all, while many types of products can be impersonated, counterfeit electrical products are particularly dangerous because:

• They have not undergone testing by an independent laboratory.
• They likely don’t comply with industry safety standards.
• They can cause electrocution or start a fire.
• Since product origins are often unknown, the manufacturer can’t be held liable if products cause property damage or physical harm.

How to Avoid Counterfeit Products

The potential dangers you face from purchasing counterfeit electrical products are clearly not worth the lower price you might be asked to pay. To ensure you don’t face any unnecessary dangers when purchasing electronics, follow these tips:

• Only shop at reputable retail locations. Established vendors only purchase their goods from legitimate distributors and manufacturers.
• If you see any grammatical errors or typos on the product label, that’s a sign the product is not professionally made.
• Look for the Underwriters Laboratories (UL) logo on the label, indicating the product has undergone proper testing.
• If the product is legitimate, you should see the name and contact information for the manufacturer on the label.
• Avoid purchasing unknown brands or products that display no brand affiliation of any kind.

How to Report a Counterfeit Product

The prevalence of counterfeit products has risen over 10,000% in the past 20 years. During this time, counterfeits have become increasingly harder to spot as unscrupulous manufacturers get better at deceiving customers via the internet and tempting low prices.

If you accidentally purchase a counterfeit product, report it to the brand owner. This alerts the brand owner to investigate the suspected product and remove it from the marketplace if it’s indeed counterfeit. If you don’t know the product’s brand, contact the National Intellectual Property Rights Coordination Center, which will disseminate the information to the appropriate parties and work toward removing the product from the market.

By taking an active role in reporting counterfeit products, you help put an end to this illegal industry, the revenue from which can often be traced to organized crime and terrorism. Demand for counterfeit electrical products would decrease dramatically if everyone reported the imitation devices they accidentally purchased.