Knowing what to do with an RRSP leaves a lot of people stumped. There are literally so many options that it is hard to know where to start. When dealing with personal finance issues like an RRSP, it is best to work with concrete, reliable entities – and what could be more concrete and reliable than gold? It’s important that Canadians learn about buying gold because it can really make a difference in the long term.
As of 2005, the Canadian Revenue Agency (CRA) has made it legal for Canadian RRSP holders to put part of their retirement investment into pure-grade metal coins and bars. There are only a few types of pure-grade metal allowed, of course, including: Canadian gold and silver bullion coins, American gold and silver eagle coins, and the Austrian gold and silver Philharmonic coins. Other types of metals are allowed, but they must meet certain purity standards. Gold bullion, for example, must be at least 99.5% pure. Silver, on the other hand, must be 99.9% pure.
So Why Invest In Gold via an RRSP?
Some financial advisors might say it is too risky a proposition, given there are no interest-earning opportunities. Even though investing in gold does limit the amount of tax-free income space in an RRSP account, it is still worth it for a number of reasons.
It Is Tax Advantaged
The first reason is that it is tax advantaged. That means any income made from the investments will only be taxed if it’s taken out. The amount of revenue this can make is far larger than the amount of money saved from not paying income tax. The other nice thing about a tax advantage is that by the time of retirement most people will be in such a low bracket that it won’t make a difference how much return is made on a gold bullion investment.
It Will Rise In Value
The second reason is that it will probably rise in value faster than a mutual fund or any other kind of investment (ETFs, property, etc) that is tied to the dollar. A financial crisis usually hits every 10-15 years and can rob the value of an investment portfolio that is not diversified. The logic of investment is that diversity and appropriate balance are the keys to success. Ignoring the value of gold would go against this logic. Appreciating the value of gold will bring security to any portfolio.
There are a couple of costs that need to be accounted for once the decision has been made to invest in gold through an RRSP. The purchasing of gold can be done through a private lender or the Royal Canadian Mint. Either way, a third party specialist must verify its purity and confirm with the Canadian Revenue Agency. Then the gold itself must be transported.
Who To Work With
Working with a reliable company is the best move because they will always have competitive prices on gold. Look for a company that offers a self-investing and managed investing service.