Mountain Planning

Registered Investments – RRSPs, RRIFs, RESPs, TFSAs

RRSPs – Registered Retirement Savings Plans are the most common investment accounts in Canada. Their structure allows an individual to invest now, and receive a tax deduction against their current income. The account grows tax-sheltered until retirement, at which time the income is taxed. In theory, the investor is in a lower tax bracket in retirement as he or she does not need as much income to live on.

TFSAs – Tax Free Savings Accounts were originated in 2009. Different from an RRSP, there are no tax deductions for contributions into a TFSA, and there is no tax on any withdrawals. TFSAs have become very popular as a rainy day account for investors, and a complement to their existing retirement planning or education planning.

RRIF/LIF – Registered Retirement or Life Income Funds are the vehicle an RRSP is converted to when the investor needs to start drawing income from their savings plan. Still invested in market funds, the investor can structure their investment income as their retirement lifestyle requires.

RESPs – Registered Education Savings Plans are the number one choice for most families for funding the post-secondary school costs of their children. Up to a maximum, all contributions are topped up 20% by the government, and sometimes more in cases where there is a reduced standard of living.

Annuities & GICs

These investments offer guaranteed returns for investors looking for more security with their Retirement Income or Savings Plans.

Alternative Tax-Efficient Investments

Borrow to Invest Strategy
The idea is to borrow a lump sum of money from a bank and invest it. By doing so, any interest charged on the loan becomes a tax deduction for the account owner. While in an economy with low interest rates and good market returns, the strategy can be very prosperous……if the market conditions are not great, the losses can be magnified. The strategy is a complex one that requires more attention to the potential “what ifs”. However, when properly executed, it can yield increased returns.

Tax–Exempt Universal Life insurance
A UL offers individuals and corporations the ability to invest inside their insurance policy. Returns are very similar to the same returns inside other investment vehicles. The strategy is increasingly popular for successful business owners, and as a tool for estate planning and intergenerational wealth transference.

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