Quote:
Originally Posted by Slava
Lastly, I better make a quick point on the tax-sheltered aspect of the RRSP; you don't pay tax on the growth. This is a big advantage if you are receiving interest income in particular. However if you are willing to pay some tax, but still want to invest early you could consider a Corporate Class Fund. This is a fund that will pay you Capital Gains no matter how the income was derived. Also, you will pay this when you take the money out, not on an annual basis.
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You're talking about an investment outside of an RRSP with that correct?
The way I understand investing is that if you're going to invest more money annually than your RRSP maximum try to keep stuff thats going to be your lowest percentage capital gain on the outside and stuff anything else inside the RRSP. If you're in a higher income bracket you'll pay full income tax on an income type investment. So for example a you'll basically pay 40% on a bond fund gaining say 7% so your net gain is only like 4%. Whereas on a capital gain that averages 12% growth a year you only pay tax on 50% of the gain, so you'd only pay tax on 6% of that. Is that correct.