The best way to live a secure and happy retirement is to start an RRSP early on and let it grow slowly over the months and years leading up to retirement (whenever that might be). Although bankers and investors will offer a variety of packages that include mutual funds, ETFS, bonds, and other investment opportunities, the two options they will probably not mention are gold and silver. Lots of Canadians are probably not aware that gold and silver are even an option in an RRSP portfolio.
But before you plunge into buying gold in RRSP in Toronto, the best place to start is by doing your research about registered investment dealers that take care of the buying, shipping, storing, insuring, and more. Here is a quick rundown of the some commonly asked questions about investing gold and silver in an RRSP:
Is It Physical? Yes, customers buy gold and silver from the Canadian Mint, where the government keeps its collection.
Where Is It Stored? The physical goods are transported and stored in a third party storage facility. If the time comes and it’s time to sell off the goods before retirement, the owner will have to cover the costs of transporting the goods from the storage facility back to the Canadian Mint in Ottawa.
Is There A New Account? Yes, a new account is made to hold the goods and give all power of movement to the investor.
Is There Insurance? Yes, a globally recognized insurance broker will take care of all costs that may accrue from damages or theft.
Can I Withdraw? Yes, at any time customers can withdraw the goods from storage. The usual RRSP removal tax will have to be paid before it can be shipped to a residential address. It is not advisable to withdraw it, however, because it undermines the whole value of putting gold in an RRSP. This value is based on the simple fact that profits made from rising gold prices will not be taxed. The same cannot be said of other investments made on the stock market, the majority of which are taxed like other income. So, the bottom line is that a lot more money can be made from gold in the RRSP than sitting in the basement.
How Much Are Storage Costs? The prices vary, but the average falls to around 1% of total metal value per annum. This might seem like a frustrating cost – but it must be remembered that gold usually does quite well on the stock market. It has reached highs of $1,900 in 2011 without falling below $252 since 1999.
Why RRSP? Putting a percentage of an RRSP into gold or silver makes sense because it makes the most of the rules governing RRSP activity. An RRSP is a non-taxable account, but holders can only put in a percentage of their income into it each year. For example, in 2016 the allotted amount was 18% of income up to $25,370.This means that there is very little wiggle room to take advantage of the tax free option – so why not leave the income in a TSFA and work with investments that can bring profit in an RRSP?
That’s the logic behind buying gold and silver at least, and it’s been working well for some baby boomers who now have a lot more saved up than they thought.