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Paul BerkenboschCanmore, AB

Money Management

What investment gives me the best return?

January 08, 2010

From time to time I get asked the question “What investment gives me the best return?” There’s an obvious answer, “Believe in Jesus Christ and you will be saved.”

After the faith decision, many of us are able to make some choices with regards to investing His money.

What investment provides the best return?

  1. Make money when selling your own personal residence. 100% of any gain is tax free.
  2. Increase the value of your business. Individuals who own businesses generally qualify for a $750,000 capital gains exemption when the business is sold.
  3. Make money in a Tax Free Savings Account (‘TFSA’). Any gains made in a TFSA are 100% tax free.
  4. Make a political donation to a registered political party or candidate and receive a 75% tax credit.
  5. Make a charitable donation. After the first $200, Alberta residents receive 50% back provided they have taxable income. To a lesser extent, other provinces also provide a donation tax credit.
  6. Earn a capital gain. 50% of gains made by owning rental properties or securities such as stocks or mutual funds are not taxable.
  7. Contribute to a Registered Education Savings Plan (‘RESP’). Money set aside for children’s post-secondary education will earn a minimum of 20%. Lower income families are eligible for additional federal grants and the Alberta government has also added incentives.
  8. Contribute to Registered Retirement Savings Plan (‘RRSP’). Contributions to an RRSP are usually eligible for a 25% - 39% tax credit depending on income level. The funds are usually withdrawn at a lower rate resulting in a savings of 7% - 14%.
  9. Contribute to a Registered Disability Savings Plan (‘RDSP’). Most adult disabled individuals who qualify for the Disability Tax Credit (or their guardians) can contribute up to $1,500 a year and receive $3,500 in federal grants (a 233% increase). In addition, lower income adult disabled individuals are eligible for a $1,000 bond.

There are positives and negatives to each investment strategy. If you require assistance sorting through various investment options, please contact a member of our Financial Planning team.

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