by Dave Peniuk
I am going to get to the point today, which is often very tough for me (according to my lovely wife and business partner, Julie!). You see, I just returned from a conference on how we can utilize the cash in our Registered Retirement Savings Plan (similar to an IRA in the USA) and become fat and rich like our Banks, and lend that cash out as mortgages. But besides learning about the process of how to do it and following all of the government rules and regulations, it was pointed out just how few Canadians actually understand what their RRSP is.
I call it the “Fallacy of the RRSP Investment“. You see, a fallacy is “an incorrect or misleading notion or opinion based on inaccurate facts or invalid reasoning“.
Your RRSP in and of itself is NOT an investment.
It is a special type of account that can hold funds in it and the funds in it are tax deferred (thus, you can write-off your contributions to it and the returns are not taxable either – UNTIL you begin withdrawing the funds).
But, and this is very important, the RRSP is not an investment. The GIC’s, Mutual Funds, Stocks, Bonds, Mortgages (yes, you can invest in a mortgage through you RRSP account) are the investment.
I want to inform Canadians (and even our US counterparts with their IRA accounts) that they need to educate themselves and take more control of their money. If you do not know, unequivocally, what investments you have within your RRSP (or RESP, LIRA, RRIF, etc.), and what is their NET RETURN to you, then you need to take a good hard look.
And you know what I am excited about? Really excited about? I am excited about the fact that I now have the full knowledge of how to use the cash in my RRSP’s and how I can help others use the cash in their RRSP’s to invest in mortgages (and with it the knowledge of what the NET RETURN will be because it’s a mortgage!! – you know, like the ones that you pay the banks hundreds of thousands of dollars in interest??!?!).
Now, I am not giving advice, as I am not a “Licensed Investment Salesperson” at one of the financial institutions (many Financial Advisors were called this until 2008), but I am letting you know you have other options available to you in your RRSP accounts. And, I urge you to find out:
- What are you invested in within your RRSP (RESP, RRIF, LIRA)
- What are your NET returns (this is your total return less all the fees charged by your Advisor, or Mutual Fund, or admin fees..)
- If you have a Financial Advisor, Planner, Broker, ask him or her to explain how your investments are doing in REAL CANADIAN LANGUAGE
- Ask your Planner what they are invested in and see if they are invested in any of the same products they suggested you invest in
If you do the above, and are able to get a real handle on the investments within your RRSP (or IRA), then you will be well on your way to taking real control of your money….because hey, no one and I mean NO ONE will (or more importantly SHOULD) care more about your money than you!