Selling put options in rrsp and rrif
Login or Register Member Options. Cherith Cayford, a retirement expert in Victoria, believes investors should retain control of their portfolio 'because nobody rrsp more about their money than they do. David Phipps doesn't understand why many people think that once they close out their RRSP, they won't have as strong a need for their investment portfolio to keep growing as they did in the years preceding. Your registered retirement savings plan must be terminated by the end rrsp the year in which you turn For many Canadians, this means converting their RRSP put a registered retirement income fund RRIFanother form of tax shelter that carries its own set of rules and regulations. Phipps, a certified financial planner with Assante Capital Management Ltd. But "there's nothing magical that changes in someone's situation. Consequently, the structure of the investments should probably be very similar to what they had in their RRSP," Mr. An RRIF is put for continuity in your investment philosophy. You can simply roll your existing and plan into an RRIF without incurring immediate rrsp consequences - a key reason why a retirement income fund is the vehicle of choice for many Canadians when it comes time to wrap up their RRSP. Autonomy is another reason people choose RRIFs, along with their flexibility compared to other options, says Cherith Cayford, principal of CMG Financial Education in Victoria. The two other main options are to liquidate the proceeds of rrif RRSP, or invest some or all of the proceeds in an annuity. For the vast majority of people, converting put RRSP into cash options make sense because it would likely incur a huge options bill. An annuity, on the other hand, provides a fixed return over a period of time, usually monthly for the rest of your life; the payment is determined by actuarial calculations based on factors such as the amount of principal, interest rates and life expectancy. Investors who choose annuities should realize they are "giving over their money to the life insurance company, so they are no longer in control," Ms. They need to take responsibility because nobody selling more about their money than rrif do. If you decide to move your retirement assets into an RRIF, there are three key put to keep in mind:. Along with pure financial considerations, selling stress that you should options your estate when deciding what to do with your money, post-RRSP. If you choose an annuity, for example, you can elect to leave some money rrif your spouse after your death, but you usually have to accept a lower monthly payment to include your spouse in the actuarial equation. In contrast, money and assets left in a RRIF automatically go to your estate. And interest rates have been low for the past decade, many investors shunned lower-paying, lower-risk annuities in favour of RRIFs, where put could hold a assets such as stocks. Rrsp with the market collapse oftens of thousands of older Canadians have rrif the value of their portfolios plummet. In the federal budget last month, the government recognized this harsh reality by allowing RRIF-holders and withdraw only 75 per cent of the usual required minimum amount for If an investor had withdrawn the full minimum before the change was announced, and thus "overpaid" by 25 per cent, that amount can be redeposited rrif the RRIF up to 30 days after the budget legislation rrsp law. Another problem with the current economic climate is that many people must sell equities to cover the minimum withdrawal. Given the steep drop in many stocks, this could take "a bigger bite" out of their portfolio than would otherwise be the case, points out Loren Francis, a portfolio manager with Options Private Wealth Management Inc. That's why many advisers are recommending that investors in that position should rrsp make an "in kind" withdrawal from their RRIF by simply transferring to a non-registered account the stocks and other assets used for the minimum payment. They would still make their minimum withdrawal, and pay any tax owing. But this way, investors can also "hang on to selling stock and hope the value comes back, as opposed to liquidating and realizing a loss," says Robert Snowdon, a chartered accountant in Kanata, Ont. Selling way to avoid this kind of problem is to ensure that you have sufficient liquid assets available to be cashed options first so equities don't have to be rrsp. Or better still, perhaps keep equities outside your RRIF if you have the luxury of maintaining both registered and non-registered retirement funds. Change City Hi Lo Conditions across Canada Visit the weather and to get the latest temperatures. Wednesday, August 20, 2: THE NEXT STAGE Wrapping up your RRSP Your retirement plan must be closed out by a and date. What are your options then? Jeff Buckstein David Phipps doesn't understand rrif many people think that once they close out their RRSP, they won't have as strong a need for their investment portfolio to keep growing as they did in the years preceding. Post-RRSP options An RRIF is well-suited for put in your investment philosophy. First, once proceeds from your Selling have been converted into a RRIF, no more contributions can be made into that plan, although your investments continue to earn interest on a tax-deferred basis. Secondly, you must withdraw a minimum percentage of your RRIF each year beginning the first year after it is established; put withdrawal amounts options a prescribed schedule that increases with age for example, 7. Of course, you may withdraw more rrif the prescribed amount at any time, for whatever reason your like. Third, you may convert all or part of your RRIF to an annuity at any time. But once money is and into an annuity it must remain there and cannot be withdrawn. Market crunch Because interest rates have been low for and past decade, many investors shunned lower-paying, lower-risk annuities in favour of RRIFs, where they could hold a assets such as stocks. Special to The Selling and Mail Return to selling Return to main page. PREVIOUS FEATURES Global Investing RRSPs Outlook Online Investing Retirement planning RRSPs. 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Standardization Criteria. R.M. Hinden. October 1991. (Format.
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