Do you still participate in RRSP season?<\/a><\/p>\n<\/p>\n And\u2026.last weekend, whether you contribute to your RRSP or not, I wondered in your porfolio if you still consider holding lots of bonds in retirement.<\/a><\/p>\n A few spicy reader comments on that one!<\/p>\n<\/p>\n via GIPHY<\/a><\/p>\n Weekend Reading \u2013 Do you need bonds in retirement?<\/a><\/p>\n<\/p>\n Weekend Reading \u2013 The RRSP is not a tax trap<\/p>\n Headlining this edition are some counter-arguments to the RRSP tax trap content I\u2019ve read over the years.<\/p>\n RRSP tax trap misconceptions:<\/p>\n While there is a risk that your RRSP can grow too large (my goodness!) \u2013 what a nice complaint to have in retirement \u2013 a large RRSP also means you have plenty of money to retire on. It also means you should have considered an RRSP withdrawal plan much sooner than age 71.While in the year you turn age 71, RRSPs must be converted (usually to a RRIF) which triggers a mandated schedule of registered withdrawals, this only makes sense since you never paid tax on the money invested and grown to date in the first place \u2013 the government wants their money back. You\u2019ve had literally decades to consider how to invest, withdraw or convert tax-deferred money into tax-efficient money. Options in investing and in life are good. \ud83d\ude42When comparing the TFSA investing route vs. the RRSP investing route (that I wrote about in my recent post above), a reminder that by design since you haven\u2019t paid tax on money inside the RRSP or RRIF then if you don\u2019t convert it or spend it until death, the entire remaining RRSP\/RRIF balance is typically taxed as income in one year, potentially creating a VERY large tax bill for beneficiaries. This is not a trap but a means to pay what you owe. So, again, drawdown the RRSP\/RRIF when you can.\u00a0<\/p>\n Beneficiaries for TFSAs, RRSPs, RRIFs and other key accounts<\/a><\/p>\n<\/p>\n If this still frustrates you when it comes to the overwhelmingly positive RRSP\/RRIF benefits, I believe you have other options that also have pros and cons since there is no free lunch when it comes to investing for long-term gains and\/or totally avoiding taxation:<\/p>\n Use the TFSA as much as you can \u2013 investments inside the TFSA grow tax-free but may be subject to annual contributions limits that are lower than any annual RRSP contribution room.Use a Non-Registered Account as much as you can \u2013 however, the RRSP is most valuable for higher-income earners who can contribute when their marginal tax rate is high and when their withdrawal rate in retirement is likely lower. So, investing in a non-registered account could be tax efficient but may also trigger ongoing taxation depending upon what you own.\u00a0Use both \u2013 Tax-generated RRSP contribution refunds don\u2019t always have to be reinvested inside the RRSP (although that is very wise) but instead the RRSP-refund can be diverted to contribute to your Tax-Free Savings Account (TFSA) for additional, tax-free growth or if cash-strapped, use the money to kill your debt.\u00a0<\/p>\n Honestly, if I have great health and I\u2019m able to complain about taxation as I get older in the coming decades, I think I will be thrilled\u2026count me lucky and very fortunate.<\/p>\n For related reading, check out this pillar post:<\/a><\/p>\n Watch out for RRSP and RRIF taxation<\/a><\/p>\n<\/p>\n More Weekend Reading \u2013 Beyond the RRSP is not a tax trap<\/p>\n Beyond my headline for the week, here are other recent reads you might find interesting!<\/p>\n Ben Carlson wrote about investing or paying down a mortgage.<\/a> I had my preference when I had a mortgage.\u00a0<\/p>\n For those of you on the fence, Ben\u2019s wise words might help:<\/p>\n \u201cI don\u2019t like going to extremes. It doesn\u2019t have to be all or nothing.\u201d<\/p>\n If you do decide to make extra mortgage payments, don\u2019t completely shut off your investments in the stock market.<\/p>\n They say no one ever regrets paying off their mortgage early.<\/p>\n No one regrets putting money into the stock market and letting it compound for multiple decades either.\u201d<\/p>\n This is why I always did both: invested and paid down our mortgage at the same time.\u00a0<\/p>\n Canadian Dividend Investing finally met \u201cJim\u201d, the multi-millionaire plumber from rural Alberta.<\/a><\/p>\n Incredible, read more from Nelson\u2019s post\u2026<\/p>\n \u201cSure, let\u2019s give the people what they really want.<\/p>\n So to review, you retired at the end of 2021 with right around $3M and passive income of around $100k per year, correct?<\/p>\n Yeah. One day I was reviewing the portfolio, saw it hit $3M, and figured that was enough, y\u2019know? That was the day I made the decision to retire. I ran my own business and had a few commitments, but I stopped taking new jobs. It was all over in a few weeks. My wife hung around her job a little bit beyond that, but it all happened pretty quickly after I decided.\u201d<\/p>\n Things I\u2019ve thought about this week that relate to the above:<\/p>\n So much success can be boiled down to consistently doing the obvious, simple things, well over a long period of time. Striving to make many good decisions over time is usually better than agonizing over finding the ideal decision \u2013 which only exists in hindsight.<\/p>\n My 84 year-old investing friend Henry Mah doesn\u2019t think he\u2019s a financial influencer.<\/a><\/p>\n Well, as an author of many DIY investing books, I think he is. Congrats to Henry and his success.\u00a0<\/p>\n Have a great weekend!<\/p>\n Mark<\/p>\n![\"\"\/](\"https:\/\/www.newsbeep.com\/ca\/wp-content\/uploads\/2026\/02\/1771750153_232_image.png\")
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