Why RRIFs are BAD!!!

[wizer]

Do you think @The Prowler has emotional or mental problems @wizer ?

I don't have an issue with either one of you. All I can say is that most members have a "forum" personna that differs significantly from who they are in real life. I don't think Weeg is even as...um.. "challenged" as he or she makes themself out to be.

I saw this with a few members who "broke character" and offered unexpected sympathy when I accidentally killed a few week old kitten.

 

[The Prowler]

A quick example:

TP earns $150,000 annually at his job, putting him into the 50% marginal tax bracket. He will retire in 10 years.

We will look at $10,000 that TP wants to invest.

Option A: Put in a RRSP.

$10,000 is deposited in an RRSP. That amount doubles in 10 years to $20,999. TP is retired and he withdraws the $20,000. His marginal tax rate is now $30%. So that $10,000 income from 10 years ago becomes $20,000 - $6,000 or $14,000 in his hand to spend as he wants.

Option B: Put in a TFSA

$5,000 is deposited in a TFSA. That amount doubles in 10 years to become $10,000. TP withdraws that $10,000 from his TFSA and it is not taxed. So that $10,000 income from 10 years ago becomes $10,000 in his hand to spend as he wants.

Option C: Take the money and invest it in a GIC.

$10,000 income is taxed down to $5,000. That $5,000 is invested into a GIC. That GIC snowballs to $6,500 in 10 years after paying income tax on all interest each year.


So when presented with these 3 options:

A) $14,000
B) $10,000
C) $6,500

Senile @Joe picked Option C) because he is a fuckin' stooge who does not understand basic mathematics and simple concepts like deferring income tax.

Senile @Joe

Do you remember this?

Do you understand now that you fucked-up?