Monthly deposits or single lump sums.
Loans for RRSP including catch up loans.
Segregated Funds Offers:
A place to invest in G.I.C.s, bonds, equities, income.
All account types (RRSP, Cash, TFSA, RESP, Non-registered).
All or 75% principle protection.
Over 300 funds to diversify portfolios.
Strategic asset allocation.
Diversified by industry.
Diversified by fund managers.
Diversified by asset class.
Transfers, severance packages locked in RRSPs managed
Investment advice and regular checkups.
Reviewed: How International Investments can be 100%
Imagine a huge
rock lifted up in the air and balanced on the end
of a playground teeter-totter. Any reduction in
the weight on the bottom end and the rock may come
crashing down. It may be dangerous, but it's not
the rock's fault. It's because the rock is leveraged.
Recent press attention
has focussed on isolated cases of large investment
losses through the mismanagement of leveraged
This has created a common perception of
as scary and dangerous, a perception which contains
more fiction than fact. It's not the fault of
it's because they were leveraged.
investment that derives its value from underlying
stocks, bonds, or market indices is called a
The use of derivatives
by Canadian mutual funds is strictly regulated,
both by type of
derivative and by the manner in which
are used. Mutual funds may trade in
only with a counterparty that has an approved credit
rating. As well, mutual funds cannot use leverage
or borrow money to buy derivatives.
use of derivatives
gives CI investors access to outstanding investments
across the globe while still retaining 100% RSP
Several of C.I.'s
funds use derivatives
or modify exposure to equity and fixed income
securities. For the S&P 500, for example,
it is more reasonable to buy a
based on the whole index than buying all 500
risk. A fund may use
to lock in an exchange rate and reduce the risk
of currency fluctuations. This is called hedging,
locking in a future buying or selling price
in times of volatility, and is an important
component of sound portfolio management.
portfolio liquidity and enhance returns.
may have lower custodial and transaction costs
which enhance returns.
One type of
used by C.I.'s international RSP funds is a futures
contract. This is simply an obligation to buy or
sell a specific instrument at a specific price on
a specific date. Futures are not considered foreign
content, and so they are 100% RSP eligible. Also,
because every CI fund must set aside enough cash
in Canadian dollars to equal the contract exposure
of the future, they are never leveraged.
Share with your Spouse
- and save on taxes
our progressive tax system, the more money your
earn, the more you pay in taxes. This is true for
all sources of income, whether earned now or as
retirement income from your tax-sheltered RRSP savings.
But if you split your RRSP contributions with your
spouse now, you can reduce the combined income tax
the benefits of income splitting, consider the following
Couple A has a
total household income of $100,000; all income is
earned by one individual. Couple B also has a household
income of $100,000; however, in this case, both
partners are earning $50,000 each. At the end of
the year, Couple A could pay as much as $40,500
in income taxes, while Couple B will pay less than
$33,000: a saving of almost 20%!
Although the Income
Tax Act contains a number of measures to limit complete
income splitting, RRSPs provide an excellent opportunity
for couples to split their sources of retirement
income. A spousal RRSP is simply an RRSP that is
set up by a taxpayer in the name of his/her spouse.
The contributor receives a tax deduction for any
contributions made, while the spouse controls the
plan and receives the benefits at retirement.
Spousal plans are
especially effective for single income households
and for couples earning different levels of income.
They are also effective for a taxpayer who is 69
or over with earned income and a spouse younger
than age 69. This is because contributions can be
made until the spouse reaches 69 -- stretching the
contribution time for the older income earner.
So, however you choose
to divide your contributions, the name of the game
is to ensure that when it comes time to draw income,
you come as close as possible to having equal income
from the two spouses. This can benefit in the short-term
as well, if it means that the higher income earner
gets the deductions on his/her income right away
-- in effect, lowering the household tax bill now,
and in the future.
to Spousal RRSPs:
What is a Registered Education Savings Plan (RESP)?
A RESP is an Education Investment Plan that allows
you, as the subscriber, to accumulate money in an
investment portfolio for your beneficiary's (usually
child's), post-secondary education. The withdrawals
can be used towards you beneficiary's tuition, books
and living expenses.
Two significant tax benefits come about because
of the tax treatment of a RESP. They are:
A RESP allows contributions to grow by compounding
in a tax-sheltered environment until withdrawn.
Since the withdrawals are made in the name
of your beneficiary, and spread out over
a number of years, your lower income beneficiary
pays little, if any, income tax.
When the student begins to use the RESP for education
purposes, the investment income from that vehicle
becomes taxable in their hands.
However, because the student typically has little
other income, or is taxed at a very low tax rate,
he or she effectively pays little or no tax on the
Why an RESP?
Higher education is quickly becoming a high price
necessity for a child's future success. According
to the Canadian Federation of Students, the current
cost for one year of an undergraduate program, including
living expenses, is about $10,000. By the time a
child, born this year, reaches the age of 18, that
one year of study will rise significantly in cost.
Estimates in Head Start, a new book by Gordon
Pape and Frank Jones, shows that in 15 to 20 years
students may well need $100,000 to $150,000 just
to complete a basic four year undergraduate degree.
Parents and grandparents want what is best for their
children's/ grandchildren's futures. They, however,
may not be fully prepared for the future cost of
post-secondary education for that child.
Just as an individual would save for retirement,
contributing to a child's RESP is an excellent way
to save for that post-secondary education.
The maximum amount that can be contributed for any
beneficiary is $4,000 per year, up to a lifetime
limit of $42,000 per beneficiary. This maximum applies
to each beneficiary and not to each subscriber who
contributes to the plan. So, for example, if a parent
and a grandparent each wanted to set up a RESP for
their child/grandchild, the combined contribution
of both subscribers, in any given year, cannot exceed
$4,000 and the lifetime limit cannot exceed $42,000.
The Canada Education Savings Grant (CESG)
Effective January 1, 1998, the government will provide
a Canada Education Savings Grant that gives parents
and others even greater incentive to save through
the use of a RESP. The grant provided by the government
will be equal to 20% of contributions made to a
RESP plan, on the first $2,000 in annual contribution
for each child up to the age of 18. The maximum
annual grant will be $400 per child. A family that
has been unable to make contributions for one or
more years may catch up in later years. In this
case, the CESG will be paid on contributions up
to $4,000 per year. The maximum lifetime grant per
beneficiary is $7,200 (20% x $2,000 x 18 years).
The Canada Education Savings Grant will be given
directly to the RESP promoter chosen by the subscriber,
to be invested in the beneficiary's plan. The grant
itself is not included in calculating the annual
and lifetime RESP contribution limits.
The introduction of the Canada Education Savings
Grant means that investments in a RESP will automatically
receive a 20% rate of return on all contributions
up to the first $2,000 per year. This automatic
20% rate of return, provided in the form of a grant
by the government, makes RESPs a very attractive
savings vehicle for your child's education.
The CESG and the investment income it generates
will be paid to the student while he or she is enrolled
in eligible full-time, post-secondary education
or training programs. If the child does not pursue
education or training, the grant must be returned
to the government. The investment income can be
transferred to the subscriber's RRSP under certain
Top Marks for RESPs
investors, you already know the importance of saving.
Of all the things that are worth saving for, a child's
education is certainly near the top of the list.
in this era of government cutbacks, the cost of
post-secondary education is skyrocketing. The Canadian
Federation of Students estimates that a 4-year degree
could cost over $67,000 by the time today's 3-year-olds
reach university. To make saving easier, the federal
government created the Registered Education Saving
let you contribute up to $4,000 per year towards
the education of a beneficiary. The maximum contribution
you can make during the plan's 25-year maximum life
span is $42,000 for each child. Contributions are
not tax-deductible, but the money grows tax-free
until it is withdrawn. At that time, tax is charged
to the student, typically at a very low tax rate.
provides an RESP savings grant to residents (proof
of residency required). This grant provides a single
contribution of $500 to your RESP.
application will require the child to have a SIN
#. We have application packages that can simplify
this process through IAPLife.
Canada Education Savings Grant (CESG) makes RESPs
an even more attractive way to save. Each year until
the beneficiary turns 18, the federal government
will add 20% to the amount you contribute for each
child, to a maximum grant of $400 per child per
year. It is actually possible to collect a total
of $7200 in tax-free grants.
the beneficiary elects not to go to college, you
can name another beneficiary, use u to $50,000 of
the RESP to fill unused RRSP contribution room,
or you can withdraw the funds in cash, taxed at
your marginal rate and less a 20% penalty tax.
have no foreign content restrictions, so contributors
are free to invest in virtually any segregated fund
they choose. To find out what RESPs can do
for you and for your children contact your
advisor and visit us at Industrial
Good Things to Know
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in Open Accounts which are "not" registered.
Tax-efficient Investing at Its Best
for Kim and her Financial Advisor is to find an
investment tool that allows her to stay involved
in her portfolio without losing compounding power
Wouldn't it be
nice if Kim's non-registered portfolio could act
like an RSP allowing both re-balancing and diversification
while deferring her capital gains taxes? It can.
C.I. Sector Fund
is a tax-deferral investment vehicle that acts like
a second RSP with no contribution limit. The structure
of C.I. Sector Fund enables investors to switch
among the 25 Sector Fund classes without triggering
capital gains. With some of C.I.'s most innovative
funds represented, investors can lock in gains while
diversifying among world regions and economic sectors.
C.I. Sector Fund unleashes the compounding power
of capital appreciation; investors can finally make
pure investment decisions that are not driven by
Work Sheet for