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Larry’s 2023 Perspective
January 18, 2023Greetings to subscribers, both new and seasoned. As we begin a new year, there is some good news...
Hi Larry. I just signed up for Enriched Academy and watched your webinar. You mentioned several questions to ask my bank so I can make the decision to move my mutual funds to ETF’s. I cannot find the questions on you website. Can you send me in the right direction? Thank you. Looking forwards to reading your book. Denise Williams
Hi Denise. The words are in the book but it goes roughly like this: “Please provide full details on all direct and indirect annual costs charged by your firm and any other investment provider including all fund MERs.” Hope you enjoy the book!
Hi Larry, I am reading your book and on page 65-66 you use a zero tax assumption for RRSPs because “an RRSP will produce the same results as a TFSA assuming the investor’s marginal tax rate is the same at the time of withdrawal as it was at the date of contribution”. I am having trouble following this. Can you please provide a numerical example to explain this? Thank you.
Great question. Let’s say you put $6,000 in your TFSA, your investment doubles over ten years and you withdraw the $12,000 tax free. Alternatively, let’s say you put $10,000 in your RRSP and assuming a 40% marginal tax rate, you get a tax refund on $4,000. So, your net after tax investment is $6,000. In ten years the RRSP investment doubles and you withdraw the $20,000. Assuming the same 40% tax rate, you would pay $8,000 in tax leaving you with $12,000. In both cases the net investment and return after tax are the same.
Hope that helps.
This wasn’t clear for me either. Great explanation! Many thanks.