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The Registered Retirement Savings Plan (RRSP) is a special account for savings and investment assets that is registered with the Canadian Government. You can use contributions to this plan to reduce your tax, and the investment to fund your retirement.
RRSP funds give a tax deduction when deposited, and income earned by a RRSP is tax-exempt while the funds remain in the plan, however, you pay tax on the funds when you withdraw it in the future.
You can contribute up to 18% of your earned income from the previous year into an RRSP. The investment options available for your RRSP are diverse and offer a variety of return rates and risk. Approved assets include:
Armour Insurance’s licensed brokers will help you choose the right investment option for your RRSPs based on your investment profile, timeline, and preferences.
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A Registered Education Savings Plan, or RESP, is the Canadian Government’s tax-free way to save for your child’s post-secondary education. The funds can be withdrawn when your child starts studies in a qualifying education program. Currently, up to $50,000 can be contributed to a RESP; over-payments are taxable.
Human Resources and Skills Development Canada (HRSDC) offers incentives to assist savings for post-secondary education through the Canada Education Savings Grant (CESG) and Canada Learning Bond (CLB).
Regardless of your family income, the Government of Canada matches 20% of your RESP contributions by paying the CESG directly into your child’s RESP account. This basic CESG has an annual maximum of $500 for each beneficiary ($1,000 if there is unused grant from a previous year), and a lifetime limit of $7,200.
There are additional CESG amounts available based on your family’s net income. For 2012, the additional CESG rate on the first $500 contributed to an RESP for a beneficiary who is a child under 18 years of age is:
If your family receives the National Child Benefit (NCB), the Canadian Government provides an additional benefit of up to $2,000. The initial bond is $500, plus $25 to cover costs associated with opening the RESP. As long as your family qualifies for the NCB, an annual $100 bond is paid directly to the RESP for up to 15 years.
Armour Insurance’s licensed brokers will help you choose the right investment option for your RESPs based on your investment profile, timeline, and preferences.