Bitcoin Ban: Merrill Lynch and Other Brokerages Take Stand
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February 17, 1: Last Updated June 20, 3: At this time of year, we are bombarded by marketing to buy the same RRSP investments we have always purchased in the past. For most Canadians, the investment of choice is a mutual fund, though exchange-traded funds ETFs are playing a bigger role for both do-it-yourself investors and bitcoin investment funds institute of canada advisers. At that time, mutual funds topped the list at 37 per cent of RRSP assets. Canadians might be surprised that foreign currencies are qualified RRSP investments, but not all currencies fit the bill.
My concern with currencies is that they do not produce an income. Profiting from converting back and forth between currencies is not easy for investors.
Historically, some Canadians have held their mortgage in their RRSP, but the strategy is much less appealing these days. Effectively, you are borrowing some of your RRSP savings from yourself as a mortgage. The applicable interest rate is the posted rate, however. So you may be borrowing from yourself at a lofty 5 per cent, but also earning a decent return of 5 per cent on your RRSP as a result.
Although it may sound good on the surface, with both fixed and variable interest rates near historic lows, I do not bitcoin investment funds institute of canada like this strategy right now. I would rather borrow from the bank at 2. Foreign stocks, including those trading on designated stock exchanges, are also qualified RRSP investments. The list of designated exchanges is quite extensive. There are 41 exchanges outside of Canada that qualify, though 11 are U.
The challenge is finding a bitcoin investment funds institute of canada institution that allows you to buy foreign securities in your RRSP, as not all will let you do so.
Precious metals may have lost some of their luster in the past five years, but can still be held in your RRSP in various forms. Gold and silver bullion, coins, bars and certificates may be qualified RRSP investments, subject to certain purity and other conditions.
Some investors feel strongly that bitcoin investment funds institute of canada portfolio should include an allocation to gold. A Ibbotson Associates study found that gold exhibited the most negative correlation to traditional financial assets from to It could, therefore, be a good hedge or portfolio diversification tool.
Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head. Some private company investments can be held in your RRSP. In order to qualify, the broad rules are that the investment must be in a specified small business corporation that is Canadian, controlled by Canadians, engaged in an active business carried on in Canada and you cannot own more than 10 per cent of the company.
This list is a simplification of complex rules so ensure you get professional advice before considering this for your RRSP. Should you buy private company shares in your RRSP? I would argue that you would be better off buying them in another account.
If you hit a home run, your RRSP could rise significantly in value and be a ticking tax time bomb when you have to start your RRSP withdrawals in retirement. And if your investment goes bust, which happens more often with private than public companies, the Allowable Business Investment Loss ABIL rules may allow you to claim a deduction against your other income and get a tax refund outside a registered account. If an investment goes to zero in your RRSP, there is no recourse.
Another class of creative RRSP investments is call options or put options. A stock option is a type of security that gives you the right to bitcoin investment funds institute of canada or sell a stock at a pre-determined price.
So a stock option is not a stock, but simply, a contract to buy or sell a bitcoin investment funds institute of canada. A put option works similarly but in reverse. If you buy a put option, you bitcoin investment funds institute of canada the right to sell a stock at a certain price. You can buy an option or you can write sell an option. RRSP investors can buy or sell call options, but call options can only be sold written if you already own the underlying shares in your RRSP called a covered call option.
Option writing strategies that are deemed by the CRA to be speculative could be a problem. In contrast, the writing of an uncovered call option, or the writing of a put option … may result in the registered plan being considered to be carrying on a business.
Option investors should proceed with caution generally, as these are complex investments. Investors should be that much more careful trading options in an RRSP due to the potential adverse tax consequences. But deferred annuities can be purchased today to start making payments to you in the future from your retirement savings.
Personally, I would be a bit leery to buy a deferred annuity today when interest rates are so low and likely to rise in the medium bitcoin investment funds institute of canada before payments start. Higher interest rates mean higher annuity monthly payments. I also like the flexibility of deciding how to draw down your retirement assets when you are ready to retire as opposed to doing so now in advance. In summary, there are lots of unique RRSP investment options available to investors beyond mutual funds.
I think most people should stick with the plain vanilla options like GICs, bonds, stocks and ETFs rather than venturing into the murky waters of alternative RRSP investments, particularly given there are so many options even within that plain vanilla group.
Filed under Personal Finance. Canadian NHL teams don't often win the Stanley Cup now, but their rabid fan base still makes them big winners. Even a modest increase bitcoin investment funds institute of canada interest rates in Toronto and Vancouver is a concern for most buyers.
