Investing on your own can be incredibly stressful and challenging. Bridge to Wealth can help you examine all of the different investment tools and select the vehicles that are right for you. We’ll also help you understand how to plan your investments for the medium and long-term, so when the time comes, you’ll have the funds you need to live life with comfort and security.
For long-term growth and stability, mutual funds are a great choice. These managed group funds have a professional directing investment strategy and purchasing securities on your behalf. Mutual Funds can be held in a registered investment vehicle like an RSP or as a non-registered investment to build wealth. Mutual Funds are an excellent complement to a well-balanced investment portfolio.
A segregated fund is a financial product issued by Canadian insurance companies. These funds offer security to the investor as they are held separately from the insurance company’s other investments. Segregated funds also provide certain guarantees such as a stable payout in the case of term maturity or death of the holder. Proceeds from a segregated fund can be paid to a beneficiary and estate fees avoided.
A GIC, or Guaranteed Investment Certificate, offers a specific rate of return over a specific period of time. Because it is a low risk vehicle, returns are typically not spectacular, but GIC’s are useful when stability is the investor’s primary concern. A great aspect of GIC’s is that the principal invested is never at risk.
RESP (Registered Education Saving Plans)
Post-secondary education is getting more expensive. An RESP allows parents to invest on behalf of their children so when the time comes, the necessary funds to pay for college or university are in place. Investments are made with after-tax dollars and withdrawals are taxed at the recipient’s rate (typically very low to non-existent for a student) so it’s a great way of funding an education. An added bonus is that the government will contribute up to $500 a year to your child’s RESP.
RDSP (Registered Disability Saving Plans)
These vehicles are designed to offer those with disabilities long-term financial security, with help from family and friends. You can invest up to 200,000 after-tax dollars in a RDSP and name a beneficiary with the Government matching personal contributions through the Canada Disability Savings Grant. Much like an RSP, taxes on earnings and growth are deferred until withdrawal of funds.
RSP, RIF, LIF
RSP – An RSP (Registered Savings Plan) allows you to use before-tax dollars to invest for your retirement. It’s a great ways to defer taxes until withdrawing funds and potentially even lower your current tax bracket. You can contribute a set amount according to your level of income up to a government-imposed maximum, which tends to increase each fiscal year. You can choose a number of investment vehicles within your RSP to grow your savings, and because of the magic of compound interest, it’s the retirement savings tool of choice for many Canadians.
At the age of 71, Canadians have to change their RSP to an RIF (Registered Income Fund). You’ll draw income from your RIF during retirement. Your savings grow the same as they would in an RSP, minus withdrawals, but once it becomes active you’ll no longer invest money in the RIF fund.
An LIF (Life Income Fund) is a registered retirement income vehicle that holds pension funds and pays out retirement income over time. The fund is designed to provide funds to retirees in a sustainable manner for the life of the holder. LIF’s don’t allow for lump-sum withdrawals but instead ensure you’ll have yearly income to maintain a comfortable lifestyle.