Friday, December 19, 2008

Year End and What I Am Doing

I have just done my RRSP withdrawal for the year. Since I am not yet 71, I do not need to convert my RRSP to a RRIF yet. However, I want to take money from it for a few reasons. I do not wish to deplete my trading account by only using that account to live on. When I stopped working, I had 50% of my money in unregistered accounts and 50% in RRSP accounts. These percentages were thrown out when I opened a Locked-In RRSP for pension money I received when I stopped working. Today, I still have this 50-50 ratio, but my original RRSP account is only 30% of the total money I have.

I am taking out my RRSP money in December because when you take out registered money, you have to pay a percentage as withholding tax to the government. My withholding tax percentage is 30%. If I do the withdrawal earlier, I would have to pay this money to the government earlier and miss out on what I can earn on this money.

I used last year’s income tax package to try to calculate what my taxes will be for 2008. When I made my RRSP withdrawal, I try to pay a withholding tax approximately equal, less a few hundred dollars, to what my taxes will be for 2008. If I do not do this, the tax I would have to pay in April 2009 will be over the threshold for quarterly taxes. Our government set things up so that you pay taxes in the year they are due. That is they want you to pay 2008 taxes in 2008. They will not let you delay taxes until April of the following year and have a big tax liability.

The other thing to talk about is charity. I have been putting more and more of my charity money into Kiva. However, there are still lots of problems in Toronto when I live. So I also gave money this year to the Salvation Army. Until I found Kiva, charity money seemed only to be band aid on any poverty problem. None of the charity money I gave seemed to really help. With Kiva, you really feel that your money is actually helping people escape from poverty. However, I could not just ignore our own poor. So I also gave money to the Salvation Army, who I think does the most for the poor in Toronto.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at for a list of the stocks for which I have put up spreadsheets on my web site.

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