At this time of year, investors are bombarded with reminders to load up their RRSPs for the tax deduction and deferral benefits – and, of course, to save for retirement. But is it possible to have too much in your RRSPs?AnthonyRosenberg/iStockPhoto / Getty Images
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Whether investors contribute to registered retirement savings plans (RRSPs) year-round or in the lead-up to the March 1 contribution deadline, determining when and where to allocate remains top of mind for many wanting to grow their investments and get a tax break.
The need for advice on how to invest in RRSPs has also become more acute in the past year as turbulent market conditions and spiking inflation have a put focus on protecting income for the future.
Here’s a list of some recent Globe Advisor articles that tackle some of the key issues that clients face this RRSP season and how experts are strategizing to make the most of the investment vehicles.
Mandatory annual withdrawals from registered retirement income funds (RRIF) in a down market can be tricky, but with some planning, clients can ease through without issue. Having a dedicated amount of cash holdings in a RRIF portfolio can prevent clients from having to collapse investments, some advisors say. Also, the sooner clients can withdraw from the RRIF, the less they will be required to withdraw later on. Deanne Gage speaks with advisors about how they mitigate down markets when clients need to withdraw income.
Most investors were happy to see 2022 in their rearview mirrors. It was a rare year in which most major equity indexes lost ground while fixed-income returns were also negative. This year, though, looks to be off to a more encouraging start. So, what does that mean for investors who are considering how to deploy their money – in particular – for RRSPs? Terry Cain speaks with three portfolio managers to get their top picks for client portfolios.
At this time of year, investors are bombarded with reminders to load up their RRSPs for the tax deduction and deferral benefits – and, of course, to save for retirement. But is it possible to have too much in your RRSPs? Many older investors are asking this question after being forced to take out more money than they may want or need from their RRSPs, especially when they’re converted into RRIFs and the mandatory withdrawal rates kick in. Brenda Bouw looks at the tax hit that retirees face along with the potential clawback of government benefits and how advisors plan for this.
What goes into an RRSP must eventually come out and be taxed as income. Still, advisors employ many strategies to reduce taxes on RRIF withdrawals at or above the minimum – something that may be especially important as retired clients seek more income to meet higher costs driven by inflation. Alison MacAlpine looks at how advisors are helping clients take advantage of their marginal tax rate so they see more of their retirement savings.
How RRSPs will be affected decades from now by an escalating global military buildup or higher interest rates are probably the last things investors are thinking about as they rush to make a contribution before the March 1 deadline. But beyond that tax refund in the spring, the long-term investments inside RRSPs ultimately determine how people live in retirement. That means choosing the right mix of investments that grow over time is paramount. Dale Jackson speaks with three veteran money managers about their best long-haul RRSP investment picks.
The majority of Canadians believe they need $1.7-million to retire confidently and comfortably, according to a new survey from Bank of Montreal. Yet, the survey also reports that “the average amount held in RRSPs nationally is $144,613, a 2 per cent increase from 2021.” That begs the question – are RRSP contributions enough to retire on? There are many factors to consider when looking at a client’s retirement savings, advisors say. Daina Lawrence looks at the options available to generate income in retirement.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
