Investing for the Future
Your financial needs change depending on your phase of life. But whether it’s saving for retirement or saving for a house, determining your financial goals and choosing the right investment to attain them is a wise move. At Henninger Insurance and Financial Services, we offer a number of solutions that will help you achieve your goals.
GICs, High-Interest Savings Accounts and Investment Funds
A Guaranteed Investment Certificate (GIC) is a secure investment that is guaranteed to preserve your principal. A GIC will also earn interest at either a fixed or variable rate for the term of the investment and is typically locked in for the term you choose. High-Interest Savings Accounts earn interest at a variable rate and are not locked in for a specific term. Investment Funds are available in different forms and can earn interest, dividends or capital gains and come with more risks that are important to discuss with an advisor. GICs, High-Interest Savings Accounts and Investment Funds can either be held inside of a registered TFSA, RRSP, RESP or RRIF account or held outside of them, which is then referred to as a non-registered account. The difference between a registered and non-registered account lies mainly in how the investment growth is taxed.
A Tax-Free Savings Account (TFSA) is a great addition to any portfolio. Its beauty lies in its growth potential – any interest, dividends, or capital gains you earn within a TFSA is not taxed and can be withdrawn tax-free at any time without penalty. While there is a maximum amount that you are allowed to contribute yearly, you can carry forward any unused contribution room.
A Registered Retirement Savings Plan (RRSP) is an investment account that has tax benefits. Specifically, your contributions are eligible for a tax credit and you do not have to pay any immediate taxes on the growth. You will have to pay taxes when you withdraw your funds but if you start withdrawing once you’re retired and your working income has stopped, you’ll be able to better manage the tax you pay. As with a TFSA, there are limits as to how much you can contribute yearly, based on your earned income.
Saving early for your child's education is a great investment in their future, The biggest advantage of RESP’s is that, depending on when you start, the government of Canada tops up your contributions with a 20 percent grant, to a maximum of $7,200 per child. When money is withdrawn from an RESP and used for post-secondary education, the grant and growth are included in the child's income for tax purposes, which while they’re going to school, is typically very low so there’s normally very little tax to be paid.
When you turn 71, rules dictate that you have to start withdrawing at least a minimum income from your RRSP. By converting your RRSP into a Registered Retirement Income Fund (RRIF), you maintain a tax shelter for your investment that gives you a steady income stream with minimal tax implications.
Building Your Wealth Starts Now
At Henninger Insurance and Financial Services, we can assist you in creating a solid investment portfolio that can help you grow your nest egg, plan for home renovations, or save for your child’s post-secondary education. Our investment solutions provide the right financial foundations so that you can enjoy life.