From Canadian Business Online Blog, Feb 23, 2009
By: Larry MacDonald
Media catching onto distorted house-price statistics
Another reason for do-it-yourself investing. And a second reason. And a third.
A clear winner in the RRSP vs. TFSA debate.
Shopping for corporate bonds like going into a candy store.
More love for bonds.
Special report on self-directed investing.
Eliot Spitzer’s thoughts on salary caps for CEOs
5 Responses to “ Financial Potpourri ”
You do realise that your “TFSA clear winner over RRSP” article is making the opposite argument, right?
By Neil on Feb 23, 2009
Neil
Thanks for pointing out incorrect title. Correct version now appears.
LM
By Larry MacDonald on Feb 23, 2009
Is this anything new? The only way the RRSP is a clear winner is if the taxpayer is in a higher tax bracket upon withdrawal than when a contribution was made. If the tax brackets are the same, they are equal. There is NO mathematical difference between contributing more to an RRSP, which is what his example posits, and a TFSA. In his own example, if you take 29% tax away from the higher RRSP amount of $259,000 lo and behold you are left with $184,000, exactly what the TFSA contains.
I posted in my blog on the 21st about the variation I called the RRSP-TFSA dipsy-doodle where you take the RRSP refund and put it into the TFSA instead and how that also works out exactly identically too.
When the budget creating the TFSA came out the Department of Finance provided an example to show the equivalence, yet people still seem to be confused.
By CanadianInvestor on Feb 24, 2009
CanadianInvestor
Interestingly, the article in the link you refer to (A Clear Winner in the RRSP vs. TFSA) is the top rated on the host website, Sympatico. I’ll take the liberty of providing a link to your blog post so readers can explore further if they like.
http://canadianfinancialdiy.blogspot.com/2009/02/is-rrsp-refund-as-contribution-to-tfsa.html
By Larry MacDonald on Feb 24, 2009
Larry, The other day in the library I caught your article in the Investors Digest.
You made a point about growing your capital about the initial $5000 contribution and suggested that if you could increase your investment up to say $10,000 and took that money out, you get to keep that new contribution room. So in theory you can re-contribute that $10,000 later on even though the limit is $5000? Did I understand your point correctly?
I think i need to read the government site to learn more.
By James on Feb 24, 2009