HomeMy WebLinkAboutThe Citizen, 2011-02-03, Page 13THE CITIZEN, THURSDAY, FEBRUARY 3, 2011. PAGE 13.
Know your RRSP investments
College students can pay off at tax time
NC – Do you know what
investments you have in your
Registered Retirement Savings Plan
(RRSP) and what options are
available?
A recent survey from BMO
Financial Group indicated that 70
per cent of Canadians were not
familiar with what investments they
held in their RRSPs.
“Knowing what investments you
hold and reviewing the key
fundamentals of investing are an
excellent way to ensure you’re on
the right track with your RRSP,”
says Domenic Gallippi, Head of
Term Investment Products, BMO
Bank of Montreal.
“For many, RRSP season
represents an excellent opportunity
to step back and take stock: get a
clear financial picture and review
what you hold in your RRSP.”
The following are examples of
investments commonly held in
RRSP portfolios:
Guaranteed Return Products –
Guaranteed return options such as
Guaranteed Investment Certificates
(GICs) offer a variety of investing
options that are stable and
guaranteed. GICs are well suited for
investors who have a low tolerance
for risk because the original
investment plus interest is
guaranteed no matter how the
market performs.
Mutual Funds – Whether your
investment style is aggressive or
conservative, mutual funds offer a
range of options to suit every
investor’s needs. Mutual funds
are professionally managed
investment portfolios (think of
them as being like a “bundle” of
stocks) that can provide exposure to
many different industries,
geographic regions and stock
markets.
Individual Stocks – Experienced
investors who are confident in their
expertise in analyzing and
understanding the markets can
invest in individual stocks by
purchasing shares in companies.
Aggressive investors tend to have a
longer investment time horizon and
therefore have time to recoup any
losses incurred by potentially
volatile investments.
Gallippi recommends that,
regardless of your investing style,
you diversify your investments. By
spreading your money among a
variety of investments, you can
increase the potential for higher
returns while lowering your overall
risk, creating a stronger and more
robust portfolio.
NC – Post-secondary education
costs are rising. Statistics Canada
estimated that 90 per cent of
students faced an increase in tuition
last year, to an average of just less
than $5,200. Over three or four
years, the costs can add up for both
parents and students.
But students do receive a number
of tax credits and benefits and some
of these can be passed to their
parents.
“No matter who pays the tuition,
the university or college issues a
T2202A to the student that indicates
the tax credits they can claim,” says
Cleo Hamel, senior tax analyst with
H&R Block Canada. “Students must
use their credits first and then they
can choose to transfer up to $5,000
to a parent, grandparent or
spouse.”
If students cannot use all their
tuition and education credits, they
can carry forward the amount for
future years. This can result in a
sizable tax refund once they begin
their careers.
“The decision to transfer credits is
entirely up to the student,” Hamel
says. “If parents do not have a signed
T2202A, they cannot make the
claim.”
Even if they earn little-to-no
income, students should file their
own return to take advantage of tax
credits and benefits. And once they
turn 19, they may be eligible to
receive the quarterly GST/HST
payment.
NC – The recession may be over
but many Canadian families are still
struggling to regain financial
stability. The average Canadian
household debt reached an
all-time high of $96,100 in 2009,
according to The Vanier Institute of
the Family.
Here are four tips to “disaster-
proof” your family finances:
• Create a realistic family budget
with your partner. Ensure you
account for all family activities and
include a reasonable amount for
entertainment. Review your budget
regularly to ensure you stay on
track.
• Have a safety net. Prepare for the
unexpected and contribute to a
“rainy day” account that will cover
your budget should you face an
unplanned drop in income. Experts
say a good target is six months
income.
• Get your advisor involved in
your family finances and meet with
them regularly. A trusted
professional can help you build the
right financial plan.
• Plan for the future. Ensure that
your financial plan addresses short-
and long-term goals. Make your
children's education and your own
retirement top priorities. Open an
RRSP for you, and an RESP for
each of your children.
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