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Online Guide for RRIFs

Posted: May 9th, 2011 by Dnee

When people retire, the money that people have in their RRSPs typically finds a new home. That home is called a Registered Retirement Income Fund or RRIF for short. When Canadians need to set up a regular income stream from their RRSPs, they have the option to use a Registered Retirement Income Fund or a Life Annuity. RRIFs are by far the more popular option these days. Here’s a list of great articles to help you make important RRIF decisions:

RRIF Basics

Understanding the basic RRIF rules
This article is a great starting point to learn about RRIFs and the basic rules of how they work. If there is only one article you read, this is it. This articles has been one of my most popular articles on the site.

RRIF minimum income rules
A RIF is designed to create a regular stream of income for retired Canadians. The government has imposed some rules around how much money can be taken out each year. They call this the minimum income

Should RRIF minimums be changed?
Some people think the RRIF minimum rules are old and needs some updating to make the rules more current and relevant to the times. What do you think?

Converting your RRSPs to income
Before you convert your RRSPs to income, it is important to take a look at the amount of money you will receive from different options including the RIF. How can you make a decision without having some numbers?

RRIFs vs Annuities
When you retire, you can convert your RRSPs into income using a RIF or a Life Annuity. This article will highlight some of the basic differences.

RRIFs and estate Planning

Designating Beneficiaries for RRSPs and RRIFs
One area of tax planning that does not receive enough attention is the designation of beneficiaries when it comes to RRSPs andRRIFs. Make sure you understand the tax implications of different beneficiary designations.

RRSP and RRIF tax traps
When you die, RRSPs and RIFs become fully taxable to the estate. Many people designate beneficiaries on the RRSPs and RRIFs at the time of application and more often than not, they do not put the estate as the beneficiary. This can potentially create a tax trap.

What happens to your RRSPs and RRIFs when you die?
Although it’s not something we like to think about it is an important issue with RRSPs, especially when it comes to tax. On death, the tax consequences really depend on who is listed as the beneficiary of the RRSP.

Taxation of RRIFs

Using RRIFs to take advantage of the Pension Income Tax Credit
Do you want to learn how to get some of your pension income tax free? All you have to do is learn about the $2000 pension income tax credit.

Income splitting strategies in retirement
In 2007, the government introduced Pension Splitting rules. Once you turn 65, you can also used the Registered Retirement Income Funds to take advantage of the pension splitting rules. This one is really worth checking out because it can save couples a lot of money.

RRIF meltdown strategy
One popular question I get is how to get the money out of registered funds without paying tax. Because it involves leverage and borrowing money, I do not often recommend this strategy. It’s still worth reading about how to do it.

Investing your RRIF

The difference between an account and an investment
A RIF is an account just like the RRSP is an account. I often call these buckets of money. It’s important to understand the different between these buckets and the investments inside the buckets.

You don’t want too much risk in a RRIF
When you convert your RRSPs to a RRIF it is critically important that you review the investments and make the portfolio much more conservative. The math of withdrawals to create a retirement income stream can work against you when there is too much volatility.

RRIFs can be a retirees best friend if used properly. I hope this guide has helped you create retirement income.

Online Guide for RRIFs originally appeared on Retire Happy Blog on May 8, 2011.

No Comments | Filed under Finance, investment, money, strategy

Investing Blog Roundup: Gold and Silver

Posted: May 6th, 2011 by voice-city.info

In addition to tracking investment returns (aka time-weighted returns) for mutual funds, Morningstar also tracks investor returns (aka dollar-weighted returns). That is, in addition to tracking how well a fund performs, they also track how well, on average, investors in that fund perform.

In general, investors tend to lag their own funds somewhat as a result of getting into the fund shortly after good performance and getting out shortly after bad performance.

Russel Kinnel of Morningstar recently shared several points of note with regard to investor returns over the last few years. I originally thought I’d have some commentary of my own to add, but after keeping the article open in my browser for two weeks, it turns out that I don’t. Instead, I’ll just point you to the article and hope you find it as interesting as I did.

Mind the Gap (2011 edition)

And my other favorites from the last week:

Investing Articles

Take Money Off the Table After a Good Run from The Finance Buff
Gold and Silver: What Goes Up… from Larry Swedroe
Investment Losses: When to Call a Securities Attorney from Wealth Pilgrim
Model Portfolios Based on Risk Tolerance from The Wisdom Journal
Bad Investing Habits from The Digerati Life
Two Reasons Not to Save for Retirement in Your Twenties from GenY Wealth
For Canadians: RESP Withdrawals from Family Plan Accounts from Money Smarts Blog

Blog Carnivals

Totally Money Blog Carnival hosted by Money Beagle
Carnival of Personal Finance hosted by Live Real Now
Tax Carnival hosted by Don’t Mess with Taxes
Carnival of Financial Planning hosted by The Skilled Investor

Thanks for reading!

Retiring Soon? Pick Up a Copy of My New Book:

Can I Retire? Managing a Retirement Portfolio Explained in 100 Pages or Less (Click here to see it on Amazon.)

No Comments | Filed under Finance, Financial, insurance, investment, money

Best of Blogs – The Globe and Mail contest edition

Posted: May 6th, 2011 by Dnee

I am so excited this week to be nominated for Canada’s Best Personal Finance Blog (Help keep me in top spot – Vote Retire Happy!). It such an honor to be among an esteemed group of people. I also found out that RetireHappyBlog is ranked 16th for finance blogs on Technorati.com. I’m not sure exactly what that ranking means or how I got that but I’m in good company on that list. Add in the fact that my financial education business is firing on all cylinders and you’ll understand why I have lots to be happy about. Oh, and one more bonus . . . it’s mother’s day this weekend.

For this week’s Best of Blogs, I thought it would be appropriate to share some work from each of the nominees from the Globe and Mail contest:

For the Love of Money says that the beliefs and attitudes you developed in childhood are influencing how you deal with money as an adult
Mike, author of the RESP book and the chief of MoneySmartsBlog gives great information on RESP withdrawals from a family plan.
Michael James on Money highlights some contradictory investment advice

Ram, the man behind Canadian Capitalist summarized what we should expect from the Conservatives after their majority win in this week’s election
Dan, the Canadian Couch Potato has a terrific article called Finding the Right Advisor (one that can help people with a passive strategy.
Canadian Mortgage Trends talks about Pre-payments to your mortgages to cut your penalties
Chris Umiastowski gives his view on RIM after Capital Markets Day
Humble Student of the Markets compared government and private compensation
Gail Vaz-Oxlade pulls no punches with her 9 Money NOT to Do’s
Krystal from Give Me Back My Five Bucks is very candid and shares her financial goals and budget for May
Frugal expert Kerry Taylor (Squawkfox) shares 50 ways to save $1000 per year
Sustainable PF shares 16 driving tips to improve gas mileage
Big Cajun Man talks about the humor behind a reputable tattoo parlours and other contradictory descriptions of financial services
Echo from Boomer and Echo gives the numbers behind his personal inflation rate
Get Smarter About Money tells you how to find money to pay the taxman
Balance Junkie gives 5 ways to clear financial obstacles
Consumer advocate Ellen Roseman says customers should come ahead of shareholders
And let’s not forget about Money Index – the site where you can find all the blogs.

Congratulations to all bloggers for their nominations. If you haven’t voted yet, what are you waiting for?

This week, I’ve been hitting up all of my contacts, clients, colleagues, friends, and workshop participants to vote so why stop now! I’ll take any votes you want to give me. Help keep me in top spot – Vote Retire Happy!

This week, I posted 2 articles

Thanks to others who included my articles in their weekly carnivals

This and That by Canadian Capitalist
Linkstuff by MoneySmartsBlog
Friday Links on Canadian Finance Blog
Totally Money Carnival by Money Beagle
Festival of Stocks by Fat Pitch Financials
Integrated Finance Carnival by Integrated Loans

Best of Blogs – The Globe and Mail contest edition originally appeared on Retire Happy Blog on May 6, 2011.

No Comments | Filed under Finance, Financial, Tips, business, investment, loan, money, strategy

What’s New Around The Blogosphere: May 6th, 2011

Posted: May 6th, 2011 by Dnee

There’s been so much going on this week that I barely know where to start. We found a place to rent for the summer until our new house is completed, and it looks like we’ll be able to save a bit of money in the process. Boomer will be coming down to visit for our daughter’s 2nd birthday party on Saturday, and then of course Mother’s Day is on Sunday, which will make for a busy and fun-filled weekend.

I wrote about The Pros and Cons of Investing in Canada over at the Mint.Com blog earlier this week. And on Tuesday I posted on Canadian Finance Blog about how to Balance your Savings and Investments While Raising a Family. Go on over and check out those articles.

Boomer and I were also very humbled and excited to learn that we were nominated in the Globe and Mail 2011 Best of the Blogs Contest as a top personal finance blog in Canada. A special thanks goes to Preet Banerjee, Globe and Mail personal finance writer and author last year’s best investing blog: Where Does All My Money Go for nominating us.

Please take a moment to visit the contest site at the Globe and Mail and vote for Boomer & Echo

Now let’s take a look at some other interesting articles from the personal finance world this week:

Wealth Pilgrim explains Investment Losses – When To Call A Securities Attorney
Soldier of Finance shows How to Properly Probe your Credit Report for Landmines
Oblivious Investor asks Is a Single Target Retirement Fund Really OK?
Million Dollar Journey shares Financial Strategies for the New Stay at Home Parent
Money Smarts Blog discusses RESP Withdrawals From Family Plan Accounts
Free From Broke explains How to Figure Out How Much Life Insurance You Need
Money Under 30 shows How to Make Your Budget Stick
Moolanomy has 8 Relocation Costs to Consider Before Moving
Cash Money Life shares 15 Inexpensive Mother’s Day Gift Ideas
Couple Money is Changing Our Financial Strategies
PT Money lists 7 Retirement Excuses You Can Overcome
Frugal Dad discusses Home Exchange: A Frugal Quid Pro Quo
Bible Money Matters asks Should you Lend to Family Members?
My Own Advisor explains Why Become a DIY Investor?
Dividend Ninja concludes his Can You Live Off Your Dividends series

We were also included in the following blog carnivals this week:

Canadian Finance Blog hosted the Canadian Finance Carnival and included Three Dividend Stocks On My Watch List
Money Beagle hosted the Totally Money Blog Carnival and included Some Great Things That I’ve Bought
Budgeting In The Fun Stuff hosted the Best of Money Carnival and included We Got An Offer On Our House!
Live Real Now hosted the Carnival of Personal Finance and included Assessing Your Estate Plan
Value Stock Guide hosted the Carnival of Value Investing and included Three Dividend Stocks On My Watch List

Thanks for reading everyone, please remember to vote for Boomer & Echo in the Globe and Mail Best of the Blogs contest. And please subscribe to our posts in your RSS Reader if you don’t already.

Have a great weekend!

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What’s New Around The Blogosphere: May 6th, 2011

No Comments | Filed under Finance, Financial, insurance, investment, money

5 Common Mistakes Investors Make

Posted: May 5th, 2011 by Dnee

“You can get poor a lot faster than you can get rich.” – Bob Miller

There is a lot more to investing than just setting aside money every month and hoping it turns into a large nest egg in retirement. Here are 5 common mistakes that investors make:

Not Paying Attention To Your Investments

You don’t have to make investing a full time job but you have to put in some effort besides perusing back issues of Money Sense magazine. How well your investments perform can determine when and how you can retire, how big of an estate you can build and whether you will ever get to do the things on your personal wish list.

Whether you’re a do-it-yourselfer or have an investment manager, make sure your assets are managed in a systematic, disciplined way. Have a plan that covers both the short and long term – your life goals. Have a strategy to achieve your goals. Monitor how well the plan is working and adjust it if necessary depending on your results and changing conditions.

Trying To Time The Market

Many people are still searching for the secret of buying low and selling high but it’s almost impossible to pull this off. Even though the market’s overall, long-term trend has been upward, many stocks make most of their gains in short, dramatic spurts. Consequently, the price you pay for being out of the market at the wrong time is enormous.

Not only can you miss out on positive returns, but you’ll also pay transaction costs for making all the wrong moves. Overall, it’s easy to see why buy-and-hold investors have an advantage over those who try to outmaneuver the market.

Letting Emotions Drive Investment Decisions

Money is an emotional issue. It has a lot to do with our feelings of success, security and self-worth. When you use those emotions to make reactive, short-term decisions, you’ll get into trouble.

Irrational fear is usually the force behind the classic investment mistake of selling all your stocks after the market takes a plunge. Those with cooler heads and a longer view know this actually may be the time to commit more money to equities.

Some investors are too conservative and let inflation eat away at their low returns. Others ride a tide of enthusiasm and go for the “get rich quick” schemes and super-aggressive investments hoping for a quick score and ignoring the higher risks.

To guard against emotional reactions you need a well-thought-out investment plan that you are willing to commit to.

Underestimating How Much Income You’ll Need

The biggest risk you’ll face is not the chance of losing your principal, it’s the risk of not accumulating enough so that you outlive your money. Calculate how much income you will need and factor in inflation (easier to do when you’re closer to retirement than when you’re just starting out). Life spans are getting longer with each generation so you may be drawing on your savings for thirty years or more.

Don’t assume you’ll stay healthy. The cost of chronic ill health can mean huge financial setbacks especially if you will eventually need long-term care.

Solely Measuring Performance Against Market Indexes

It’s gratifying to learn your portfolio has outpaced the TSX or the Scotia Bond Index and indeed that is how portfolio managers have measured their performance relative to their peers, but it’s much more important to know how well your investment program is doing in relation to your personal goals.

Your results may look great against market benchmarks, but still fall short of the asset growth you’ve targeted. If your portfolio loses money in one year, you’ll have to earn a greater amount in the next year to stay on track.

Look at your actual return after taking into consideration taxes, inflation and other expenses.

By avoiding mistakes you will build your wealth steadily and consistently over time without taking unnecessary risks. You’ll know where you’re going and how quickly you are getting there.

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