Canadian Personal Finance Blog

TD Waterhouse Finally Does One

This relatively new savings vehicle introduced by the Government a while ago, has been taking a while to appear as a Savings Vehicle in many of the banks. I have been checking with TD for a while, but they have finally come out with their version of the RDSP .

This whole delay is a bit frustrating given the alacrity shown to get the TFSA vehicles in place for TD, yet for the RDSP an almost sloth-like speed in getting this savings vehicle in place, but I guess, better late than never will be the point of view I should take. I would like to point out the BMO has had an RDSP vehicle available for a while (and it almost caused me to move my banking services, and may still yet).

Who is Eligible for the RDSP?

The government’s explanation is simple enough:

• is eligible for the disability amount;
• has a valid social insurance number (SIN);
• is a resident in Canada and at the time the plan is entered into;
• is under the age of 60. This age limit is not applicable when a beneficiary’s RDSP is opened as a result of a transfer from the beneficiary’s prior RDSP.

The first point being the most significant. If you have a loved one or someone who you are helping who is disabled they must be identified as disabled by the Government, and that means you must have filled in a T2201 Disability Tax Credit Certificate and had it approved by the government. Once that is in place then you can start looking at the RDSP, as a possible solution for your future financial plan for the disabled loved one.

Why an RDSP?

That’s a good question, I think it is worthwhile reading over the Government’s information on the program, but the quick synopsis from their web site is a good starter:

A registered disability savings plan (RDSP) is a savings plan that is intended to help parents and others save for the long-term financial security of a person who is eligible for the Disability Tax Credit (disability amount).

Contributions to an RDSP are not tax deductible and can be made until the end of the year in which the beneficiary turns 59 years of age. Contributions that are withdrawn are not to be included as income for the beneficiary when paid out of a RDSP. However, the Canada disability savings grant, Canada disability savings bond and investment income earned in the plan will be included in the beneficiary’s income for tax purposes when paid out of the RDSP.

So a useful vehicle for parents with disabled kids worrying about how are their kids going to thrive or survive financially in the future.

Benefits of the Program

There is no limit to the amount of money that can be put into an RDSP in a particular year, however there is a $200,000 lifetime limit in place per person.

The benefit of putting money in this type of savings vehicle is that the government will pay matching grants of 300, 200 or 100 percent of the value added, depending on the income level of the family. This could mean for someone who’s net income is less than $34000 they would get $3 more for every $1 put into the program, whereas someone who’s net income is over $77000 currently, will get $1 more for every $1 put into an RDSP.

For folks with disabled loved ones this is another way to help out financially, and I am glad to see that TD is finally getting on board with the program.

In a week where I discussed my investing tactics, balance is the important topic to remember. All things need balance, and ensuring your investments and retirement strategies are in good balance is very important, too much of anything can be a bad thing. 

Random Financial Thoughts

Of the financial bloggers I read, these articles caught my attention:

• The Canadian Capitalist did an update on his Sleepy Mini Portfolio (I base one of my RRSP’s on this set of index funds). Remember the importance of re-balancing in this type of strategy.
• One Caveman is going into semi-retirement (a notion I toy with every month or so these days as well), in Thank You For Joining Me On My Journey.
• Canadian Financial DIY is asking whether Claymore is Being Sneaky about Showing Fees on it’s ETFS? Sounds sneaky to me. 
• Michael James comments on the upcoming Entrust Shareholders Vote on a Takeover where he has a stake in the outcome. 
• Larry MacDonald is Praying for the Vanguard takeover of iShares, which hopefully will bring lower MERs.
• Preet at Where Does All My Money Go, says the Countdown Begins, but this is for a new venture for him on the W Channel, stay tuned!
• Four Pillars wrote about Creating a Fake Reputation and his experience in these areas. Go with your gut, and if it feels bad, it’s bad, is not bad advice.

Looks to be a nice weekend here in Ottawa, get out and enjoy it!

That is what Minister Flaherty has created, a budget for every single person in Canada (or at least everyone in Canada will be touched in some fashion or another). This is an all encompassing and wide sweeping budget to kick start the economy (hopefully) and drive the government back into the glory days of the 70’s for racking up massive deficits ($33.7 B this year alone) (my opinion).

Budget Things that are Good For Me

Since I personalize things usually here is a list of things in the budget that are a good thing for me:

• EI payments will be extended by 5 weeks, which is great, except I haven’t started collecting E.I. yet, but it is good to know that if I need it, I will be getting it for a longer period of time.
• $8.3 billion for the Canada Skills and Transition Strategy, this is a good thing, since it helps unemployed folks like me get retrained and learn new certifications and skills (I am currently working on I.T.I.L. base certification and will move on to more technical training soon, as part of a provincial training program).
• Basic personal tax exemption for this tax year goes from $9,600 to $10,320, not a bad thing making $720 more not taxed!
• Tax brackets move up with (quoted from CBC) “…The upper limit for the 15 per cent bracket would go to $40,726, while the upper income limit for the 22 per cent bracket would rise to $81,452….”.
• Some very vague statements about “Mortgage Insurance” that we couldn’t really decypher (whether it pertained to CMHC insurance or the insurance banks offer on their mortgages).
• Tax relief for home improvement projects up to $1350 (if you spend $10000 or more) but only for this year and only for work done starting today.
• Adding CDIC support for TFSA accounts. This one surprised me, since I thought that was already in place, but I am very happy to know my TFSA is insured like a bank account is.
• “…Extending the Wage Earner Protection Program to cover severance and termination pay owed to eligible workers impacted by employers’ bankruptcy….”  which should help Nortel employees in specific, but not by much.
• EI Rates are now frozen for a while, which is cool.

And a lot of other rhetoric and vagaries that confuses me.

I actually got to read the Budget document when Larry MacDonald showed it to me, which was kind of cool, but he kept it. 

Is this budget going to help? I don’t know. Are the Liberals going to vote it down? I don’t know, but don’t worry all that will give me much more to write about in the next few days, so stay tuned.

The new year has brought a heck of a lot of snow to Ottawa, and a bus strike which continues to annoy and make my life interesting (having to drive my kids to school every day). My site has been up and down a bit in the past week as well, I am working with my hosting firm to come to the root cause of the problems as well (my apologies for those who have come to read and found a dead site).

Sweeping the Financial Blogs

This week’s sweep brings up some interesting start of year thoughts from some of the financial bloggers I regularly read:

• The Canadian Capitalist is offering a gently read ‘Til Debt Do Us Part Life Planner which he received, so go over and sign up for his give away (free stuff is best stuff).
• My posting about a Questionnaire For Everything made this week’s Carnival of Satire (#109)
• Michael James has been telling me about a book he has been reading Money for Nothing: One Man’s Journey Through the Dark Side of Lottery Millions and he does a review of the dispicable industry that has grown in the U.S. buying annuities from unsuspecting dupes.
• Larry MacDonald talks about what he learned from a friend about Hedge Funds when Hedge Funds Blow Up, it’s a sobering read.
• Ellen Roseman is looking for folks’ opinions of Financial Planners and is looking for your input on the subject.
• One Caveman went for the “cheap pop” by posting a picture of his New Daughter (he posted the next day, that is blogging above and beyond the call of duty dude!). Hope he has a SIN number for her and is setting up an RESP right now!
• Apple announced at MacWorld a new pricing scheme for their iTunes store which is good for old guys like me, but raises the prices on first line hits to $1.29 but removes DRM as well? Interesting.
• Promod over at Riscario Insider had a harrowing Christmas when his son had a bad allergic reaction and spent Christmas in the Emergency Ward. 
• No Debt Plan bravely published his 2009 Financial Goals,  I have no such plans because I am not that brave and know this is going to be an interesting year for my family and our finances.
• If anyone is really curious about how much “money” I make on this site, I post my income every work on my “working” blog Working Hard on the Internet as well.

Welcome 2009, let’s hope you behave better than 2008 (financially at least).

The end of year is fast approaching and here are a couple of points that you might want to think about before you close the books on 2008.

Charitable Donations

Why not top up your charitable donations for the end of the year and take advantage of the holiday season to give to folks who might need your help (and give you a bigger tax credit as well). 

RESP Top Up

Given this is paid quarterly it isn’t as important really, but still a good idea that if you have extra money or were given money for Christmas or Hanukkah, maybe put it in a savings vehicle that will help you save for your child’s education?

TFSA 

Go to your bank and get set up for a TFSA, but make sure there are no hidden fees as I found out when I went and talked to TD about their TFSA. This makes a lot of sense for anyone who is going to save, or just use it as a place to store your Christmas fund every year? 

Christmas Fund

Start a Christmas Fund for next year. See how much you spent this year, divide it into chunks for each pay cheque and set up an automatic savings vehicle to put money aside so that you have money for Christmas next year. I did this with CSB’s for the longest time and it worked very nicely.

RDSP

The Registered Disability Savings Plan comes into effect now (I think), and if you have a child or loved one who can take advantage of this new vehicle, set one up and get it moving as well. I know of many parents who could take advantage of this program for their disabled children, hope they do.

Remember only two days left in 2008!