A few basics on the account types we service. The investment vehicles we use to invest can be can be just as important as how we invest invest. We utilize all available accounts to optimize the location of your investments to maximize your after-tax returns.
Non-Registered accounts (Cash Accounts) are fully taxable accounts. These accounts benefit from extra care to minimize taxation. Buy or sell actions may trigger capital gains in these accounts. In addition, any interest income earned in a cash account is fully taxable.
Fee-based accounts are structured so that any advisory fees are paid independently from any investment management or trading costs. As these accounts require individualized billing, we usually recommend fee-based accounts to clients with higher account balances, due to increased accounting costs.
Tax Free Savings Accounts (TFSAs) are more than a simple savings vehicle. They are nearly identical to an RRSP, except that investments are bought with after-tax dollars. Ignoring foreign withholding-tax issues, if we start and end in the same tax bracket, and expect to earn the same rate of return, investing in an RRSP or TFSA will be equivalent.
Registered Retirement Savings Plans allow investments to be purchased with before-tax dollars. When we reach the age that we would like to begin withdrawing from our RRSPs, we convert it to a Registered Retirement Income Fund (RRIF). Where we can make more frequent withdrawals that are fully taxable as earned income.
Registered Education Savings Plans (RESPs) benefit from government contributions of 20% (up to $500/yr) for post-secondary education expenses. There may also be additional grants available depending on your province of residence.
Registered Disability Savings Plans (RDSPs) are a fantastic way to save for the future if you, or someone you know, has a disability. Qualifications for opening an RDSP depend on an individual's eligibility for the Disability Tax Credit (DTC).
Locked-in Retirement Savings Accounts (LRSPs) or Locked-in Retirement Accounts (LIRAs) are mostly utilized to transfer in pension assets from a previous employer. While you gain the flexibility of picking your investments, there are strict withdrawal rules associated with an LRSP/LIRA. Once eligible, an LRSP/LIRA may be converted to a Life Income Fund (LIF) to make withdrawals.
Corporate accounts may be utilized to invest with before-tax dollars to the ultimate benefit of the owners. However, due to higher accounting costs, annual filing fees, we recommend having a discussion with your accountant to ensure you maintain an after-tax, after-cost benefit to holding your investments within a corporate account.
Margin Accounts allow for the use of leverage when buying or selling securities. Strict lending rules apply. In general, we do not recommend buying securities on leverage, although we possess the ability to do so.