Are RRSP's A Bad Idea Right Now?

I find money and banking problematic, I hate the system and go out of my way to avoid it. The only thing I do financially is put away money every month into RRSP's. Its just one of those things my Dad always told me to do when I was young so I did without even thinking about it. I used to have them just sit there and collect a little bit of interest but recently decided to try to get bit more out of them and go for some low risk stocks.

Im sure by doing this Im just keeping this corrupt system a float but what else should I do? Just keep the money in a savings account? If they close the banks or there is a run on the banks Im kinda screwed if all I have is cash in a savings account. But if everything does go belly up, are RRSPs even safe? Can the banks take this money too?

Thanks for the help! And sorry if this is the wrong forum to post in...wasn't sure....

reply to post by wrdwzrd

Pensions are falling in value all the time, maybe due to the high costs of the pension companies (they take a nice chunk of your cash) and their bad investments. Personally I'd stay well away from any kind of stocks because that is just what they are losing your money on now. Either put it in a bank account of your own, or keep it under your mattress and just let it sit there. You could invest in gold or silver but I'm no expert on those things. Personally I trust silver more but that could just be a personal thing of mine.

I believe the US is "borrowing" the pension money (401k?) so if it is there in the future when people need it might be anyone's guess. Others here will know more on that though.

I regularly get letters from my various small pensions. They all say the same thing. Due to "economic crises" your money isn't going to be worth what we projected it to be.

Good luck.

reply to post by LightSpeedDriver


Ive always been interested in investing in metals...maybe I'll look into that. By the way Im in Canada so we don't have 401K but essentially its the same and our government is stealing ours too. Same sheet, different pile...

Do you trust your banks?

Do you trust your Government?

Do you believe we are heading for a Global Meltdown?

Do you trust the Fed?

Do you have faith in the US Dollar?

Do you believe we are experiencing more Global Catastrophes?

Do you believe the US is going to fall?

These questions and your answers might help to address the RRSP issue.

My answer?...HELL NO!

Peace

I am in the same boat as you are, Canada here and we don't do RRSP'S but we do as an above poster mentioned we stuff our mattress and have been doing so for the past 4 years about.

This is not meant to be advice but just a comparison for you to gauge your own situation with.

We do have a few thousand shares of Imperial oil but that is it for us, we figure if things go bad cash is king, but at the same time maybe that cash will just be toilet paper?


The good news is that if the States go belly up we should have a few months warning here, at least we have oil and minerals but our government is no less corrupt so it is anyone's guess.

Regards, Iwinder

reply to post by wrdwzrd

Yes, after I googled what an RRSP was i discovered you were in Canada. It makes it so much easier in conversations sometimes when people give their location in their avatar/profile area. Good luck researching your options. Stay away from the big buys and do something you can trust.

ETA I have a few (not many) small pensions, each containing probably just a couple of hundred euros each. I am attempting to get them all paid out now even though it might not be possible or I will incur huge penalties I don't care, I need money now, not 25 years from now.

do you think its a safer to reinvest the RRSP money into gold and silver? I know your all not financial experts, just curious to what other people are doing

reply to post by wrdwzrd

All I vaguely know is that silver has quite a stable price, whereas gold doubled in the last 5-7 years. I do not trust gold though so personally I would go for silver, money in mattress or something else. Not necessarily in that order.

I personally feel the TFSA (Tax Free Savings Account) is the way to go if your looking for major capital gains. For the non canadians on here it works like this (in a nutshell): you can put up to $5000/year into the account and you are taxed on this amount. When you take the money out of the account you are not taxed, thus any growth/capital gains are essentially tax free. I just fear a future goverment will re-neg the TFSA and all that saving would be for nothing.

RRSP is exactly the opposite. Its really your call, if you feel you can get more from tax savings now then the RRSP is best (particular if income is high), TFSA might be better overall tho. Or combine the two. Really depends on your situation and what you feel is right for yourself. Just know the facts about each first and how they work then make a decision from there.

As for investing, i am honestly fearing a major crash (low interest rates and QE have created a very very dangerous situation in terms of debt that combined with the boomers cutting spending as they prepare to retire will create a perfect storm to seriously degrade economic conditions). Be cautions particularly if you cannot accept a lot of risk. I personally am sitting on cash to wait and see what happens.

But then again im no expert.

reply to post by DSO

Maybe I'm being incredibly dim here but that sounds like a scam in itself. They tax your already taxed income when you put it into a special savings account? WTF? Any idea how much they tax that 5000? TIA

reply to post by LightSpeedDriver


RRSP's give you a tax break on your income tax, TFSAs don't give any such discount to income tax. Thus the $5000 is part of your after tax income. No special rate for actually putting the $5000 in the account. It's definitly an attractive deal (in fact when they first annouced it I thought it was a scam and infact to some extent i still am worried it is).

reply to post by DSO

Thanks, now I get it. They've tried the same thing here I think to encourage people to "save" but I sometimes wonder if it isn't all just an attempt to get more money into the banks with which they can then create more money and loans from. Thankfully it's not something I can worry about anymore because I don't have any money. Or a job.

I contributed to RRSP's for many years and now that I am retired I have about 100,000 in RRSP's that as I draw out I get taxed. I am taking out a bit at a time and putting into TFSA's (Tax Free Savings Accounts) as the interest is tax free. As I take out of the RRSP - I get taxed. Then when in the TFSA it is tax free. I should have all of it converted to TFSA's in 4 years. That way, when the big bust comes - I will just draw out of the TFSA and live off that. Peace.