GROWING A GREEN THUMB

I - AM - A - GARDENER.
Yes, I am.

...ok, I don’t always know exactly what I’m doing but, things seem to be growing in my backyard because of ME. (Insert prairie girl grin.) I am re-planting one year’s harvest of one thing, to help make it stronger, and more bountiful the next year. I am ripping out what I don’t like (sans apology) and replacing it with what makes me happy. I AM IN CHARGE. I am in CONTROL .... ummm, of everything but the plants. Did I forget to mention that plants don’t grow when you want them to; they grow only when the conditions are right. They all have their own personalities, you just have to choose which ones you can handle, and care for in any given season.

Yes, you would be correct if you started to sense a metaphor creeping up... HULLO? Gardening? Growing? I didn’t start the blog to chat about your green thumb...

OOO! An accidental metaphor! YESSSS-aaaaahhh!
(I love it when that happens.)
Your green thumb! Get it? GREENBACKS, MONEY, MOOLA!
(pat myself on the back)

Growing a bountiful harvest in your financial garden is no easy task. I started off believing in one financial path only to discover that there was more than one way to create abundance. Some products that I was hell bent on not considering, I am now thinking might be something to add to the pot.

The two growth options I’m talking about today are
(solely to stir up a conversation and get people thinking about their saving options)
RRSPs and TFSAs.
(BO-RING, but keep reading anyway...)

When I first attempted to grow my money, RRSPs were basically the only suggestion made to me .

• Put money in
• Get a tax deduction against my income that year
• Watch it GROW
• FLUCTUATE
• or SINK into OBLIVION
• and GROW AGAIN
• RETIRE on what is left AFTER taxes
• EARLY WITHDRAWALS are taxed heavily so, it’s best to LEAVE IT ALONE
• ONE TIME USE for first time home buyers to be PAID BACK over 15years.

The success of my RRSPs was based on how well the banks did,
not necessarily how much I put away.

I didn’t get that it was a tool for banks to play the market (on my behalf) and if the market crashed so would I. In fact, nobody said anything about CRASHING, just growth. Hmph! To the people who only planted an RRSP crop over 30 years, and were about to retire in 2009, the fall of the 2008 market was the equivalent to a hail storm five minutes before starting up the tractor (and a big wake up call for me as I narrowly missed a huge loss myself).

I have no regrets about starting my savings with RRSPs.They were a great tool to use for a first time property investment. It was my best/only option at the time and it enabled me to get ahead on establishing an actual net worth.

WHAT WOULD I DO NOW?

If I was the same 25 year old singer today, wanting to start saving for retirement (and/or mile stone investments like a home/family/continued education) I would probably use the TFSA instead. The Tax Free Savings Account (which has only been in existence since 2009) is a place where money can be:

• STORED and SHELTERED from being taxed (up to $5000 yr.)
• WITHDRAWN for whatever you have been saving for, sans taxes on that income
• Unlike the RRSP, if you take it out, you DON’T have to pay it back
• CARRY FORWARD contributing room indefinitely
• CHOOSE to have it INVESTED like RRSPs (no tax on the interest) & will fluctuate with the market
• or KEEP it as a SECURE account ie: STOCK MARKET CRASH FREE (sacrifice investment growth for security)
• There was even an article that they might be raising the contribution limit to $10,000.00 by 2014
• Biggest drawback: It cannot be used as a yearly deductible against your income....b’bye tax return

“When I retire, I don’t want all of my savings to be taxed when I start to live on it as income. I may not get a tax break today, but today I’m still working, healthy, and able. I would rather pay now when I can handle it, instead of later.”
Something for artists (whose income fluctuates as much as the markets) to consider.

Again, I hi-light these two options today SOLELY to stir up a conversation.

There are many more options to consider (it’s no secret that I am a big fan of property).
My hope is that, at the very least, this will spur you on to
start digging in your garden and GET SOMETHING, ANYTHING GROWING
for a happy harvest in the future.

Thanks for reading!

*As always, a reminder that I am not a financial advisor. I write for entertainment and inspiration only. Please see a licensed financial specialist when making final decisions with your money.

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