Here’s a primer highlighting some standard ways to save and invest your money. The truth is credit counselling Canadians is necessary because Canadians need to save more . We need to plan more for savings and sometimes that takes the help of a professional Canadian credit counselling group like Credit Canada. At the same time we should be aware of the many ways to save and invest through our banks and investment institutions.
Typically when people think about putting money away a simple savings account comes to mind. Well an everyday savings account is always a good thing but it is far from being the only way to hold onto money and grow it. Here are some savings and investment options. Each has different advantages and structures.
High Interest Savings Accounts are a safe way to save money. They bring you a higher rate of interest than most bank accounts.
Guaranteed Investment Certificates (GICs) come in different forms that bring a return on your investment through interest at either fixed or variable rates. Or the returns GICs offer are based on a pre-determined formula. GICs are secure investments that guarantee by regulation 100 per cent of the original amount you invest while earning interest.
Mutual Funds can be described as pooled funds that bring financial returns through a number of different stocks, bonds or other investment products. As an investor in a mutual fund you purchase units of the fund, rather than the specific stocks, bonds. etc. that pool together to make up the fund. The idea here is that taken together elements of the pool will bring you a good financial return while spreading the risks that come with investments in stocks, etc.
Credit counselling Canadians doesn’t just mean addressing the money you owe. We can help you make smart decisions with the money you have too. Along with the above there are investment vehicles in Canada offering great tax advantages:
Registered Retirement Savings Plan (RRSP) is a personal savings plan designed to help you save for retirement. On an annual basis as you put money into the plan, you can deduct your contributions from your taxable income, so your taxes for the year are reduced. Also, until you withdraw the RRSP, you do not have to pay tax on its earnings. This allows the total value of your RRSP investment to grow faster over time, even as you continue to contribute to the plan year after year. There are annual limits, though, to how much you can contribute to the plan. The annual RRSP contribution limit for 2014 was $24,270, or 18 per cent of your earned income in the previous year (whichever is less). Taxes on earnings from the plan only apply when you at last decide to withdraw money from the RRSP.
Tax Free Savings Account (TFSA) is an investment account that you can put money into to help you achieve both short-term and long-term goals. A TFSA can be made up of cash holdings, GICs, mutual funds, bonds and other investment products. All investment earnings in a TFSA are not taxed even when withdrawn. You can contribute up to $5,500 per year to a TFSA if you are a Canadian adult with a valid Social Insurance Number (SIN).
Registered Education Savings Plan (RESP) can help you save for your child’s college or university education. As you contribute to the plan, your money grows on a tax-deferred basis. Until the RESP is closed out, no taxes apply to its earnings, and even then the earnings are not bound to be taxed if they are used for the intended educational purpose. Note especially that eligible RESP contributions receive a grant of $500 or more per year from the Government of Canada until the year your child turns 17 (up to a maximum of $7,200 over the life of the plan). Clearly, it’s very wise to start saving through an RESP as soon as possible.
Registered Disability Savings Plan (RDSP) helps disabled Canadians and their families to save for the long-term financial security of those with disabilities. It allows savings to grow on a tax-deferred basis. The RDSP also provides for government assistance, including grants of up to $1,000 a year, and bonds of up to $3,500 a year.
* Blog content provided through the support of platinum sponsors of Credit Education Week Canada’s Focus Magazine.