Can You Buy Stocks Using Your RRSP?

Yes, you can buy individual stocks within your RRSP. Take advantage of the benefits of having an RRSP, and any employer matching contributions while taking charge of your own retirement money. Plus you can avoid the high fees mutual funds typically charge.

A Registered Retirement Savings Plan (RRSP) is an account that provides tax benefits for saving for retirement in Canada. Any money that you put into your RRSP reduces your taxable income by the same amount; therefore your income taxes will be reduced. Another benefit is all your investments within an RRSP account grow tax deferred. In other words, any profits made on your investments within an RRSP account in the form of interest, dividends, or capital gains are not taxable until you withdraw the money. In theory income tends to be lower in retirement so when you do withdraw money from your RRSP account, you will have to pay lower taxes on that income.

How do you actually go about using your RRSP money to purchase individual stocks? Here are 4 simple steps:

1. Open an online discount brokerage RRSP trading account. You can easily create an account at any major bank.
2. Deposit any money that you were planning to put into your RRSP into this newly created brokerage RRSP trading account.
3. Or transfer any money from an existing mutual fund RRSP account into this newly created brokerage RRSP account. You will not incur any income taxes because you are transferring money from one RRSP account into another RRSP account.
4. Now you are all set to purchase stocks, remember to stick with quality undervalued stocks. For more information be sure to read my “Top 3 Tips for Successful Investing”.

What about company RRSP matching contributions?

Not a problem, simply open a standard RRSP account with your employer’s choice of financial institution, but instead of buying mutual funds just park the money into a money market fund.  Every paycheck, your RRSP contribution (along with your employer’s matching contribution) will go into the standard company RRSP account. At the end of the year or every 6 months transfer the money into your own RRSP trading account. Before sure to first check with your company, regarding their vesting period. At some companys the matching contribution will vest right away or after 6 or 12 months. Once the vesting period is over you are free to also transfer the company’s matching contribution into your RRSP trading account.

Investing for yourself by yourself really isn’t difficult, risky, or time consuming. You simply have to have the knowledge on how to invest responsibly, and how to avoid making mistakes. Don’t speculate, invest. I can show you how.

ps: For our American readers, you can use a traditional deductible IRA or a Roth IRA to hold individual stocks.

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And The Winners Are....

Thanks to everyone who entered my 1st Year Blog Anniversary Giveaway, tweeted, liked, and mentioned it on their blogs!! Here are the winners:

Two Grand Prizes: The Simply Investing Online Course,Value Package (valued at $347 each)

Pam Whitlock, SB

2nd Prize: $225 Simply Investing Gift Certificate

Mike Osmond

3rd Prize: $155 Simply Investing Gift Certificate

Michael Brimner

4th Prize: $30 Amazon Gift Card

youngandthrifty

All the winners have been notified.

Congratulations to all the winners! Thanks again for all your support, I really appreciate it!

One Year Blog Anniversary Giveaway, over $1100 in prizes!

Wow! I can't believe it has already been a year since I started blogging here at SimplyInvesting.com. To celebrate, I'm having a huge giveaway!

Here are the prizes:

Two Grand Prizes: The Simply Investing Online Course, Value Package (valued at $347 each)

2nd Prize: $225 Simply Investing Gift Certificate

3rd Prize: $155 Simply Investing Gift Certificate

4th Prize: $30 Amazon Gift Card

This is a great opportunity to win the Simply Investing course! The only course of its kind that helps you earn more, and save time. I've helped 100s of people learn how to become financially successful, and you too can start earning more. Customers rave about, the step-by-step no-nonsense approach to investing successfully in dividend paying stocks. This is your chance to win the ultimate online dividend course. I promise you, your chances of winning are high!!

To enter, simply subscribe below to the Simply Investing Newsletter for a chance to win. If you are already a subscriber, then your name is already in the draw.

Email:
Name:

Contest closes February 19, 2012 and winners will be announced February 21, 2012. Winners will be chosen randomly. Good Luck!

Thanks to all my fellow bloggers, readers, and clients for all your support over the past year!!

Kanwal

ps: Want to increase your chances of winning? Tweet the following line for an extra ballot:

Enter the $1100 giveaway at Simply Investing, I just did! http://bit.ly/wzE15w #SimplyInvesting

Financial Carnivals

A Financial Blog Carnival is a collection of great articles posted by financial bloggers. It is an excellent way to read articles from different types of bloggers and get a unique perspective. Most carnivals are posted weekly on various topics.

I have had the honor of recently participating in a number of financial carnivals. Have a look:

Self Directed Investing For Retirement Carnival – Challenging Week Edition

Carnival of Financial Planning – Edition #218

The Wealth Builder Carnival #61

Canadian Finance Carnival #70

Carnival of Financial Camaraderie #15

The Wealth Builder Carnival #59

Canadian Finance Carnival #68

Carnival of Road to Financial Independence  #38

Carnival of Financial Camaraderie #13

Self-Directed Retirement Investing for Retirement Carnival

The Wealth Builder Carnival #55

Canadian Finance Carnival #64

Carnival of Financial Planning Edition 210

The Wealth Builder Carnival #53

Yakezie Carnival – The Superbowl Clones Game

Top 3 Tips for Successful Investing

The beginning of the new year is a great time to plan for the future. Plan on how you will be able to earn more passive income this year than last year. Here are 3 tips to help you earn more:

1. Remain Focused

Ignore all the media noise about debt, high unemployment, and downturns. Do not jump from one strategy to the next. Stay focused on investing in quality dividend paying companies when they are undervalued.

2. Patience

Investing requires patience, in the short term stock prices go up and down, in the long-term history has shown that value stocks perform very well. This is why I teach in the Simply Investing course that any money you require in less than 5 years (to buy a house, car, or go on a trip) should not be invested in stocks. Investing in stocks requires a a long-term outlook.

3. Buy Low

Remember the saying "buy low, sell high"? Buy quality stocks when they are priced low (undervalued), this way you can maximize your profit. There is no point in buying any investment (mutual fund, stock, index fund, real estate) when it is priced high, you will never make any money on it or it will take decades to realize a small profit. How do you know when a stock is undervalued? Watch my webinar where I explain how to determine when a stock is priced low.

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Monthly Blog Roundup - Bringing You The Best of the Best

Here is the monthly blog roundup for January.

There are a some really good bloggers out there, and this is my opportunity to share with you the best of the best.

Enjoy!

My Own Advisor, Credit Cards Can Be Better Than Cash

The Dividend Pig, Northrop Grumman Dividend Stock Analysis

Dividend Growth Investor, We Are Not In a Dividend Bubble

Invest It Wisely, 5 Debt Solutions For Smaller Debt

The Dividend Ninja, What Should I Invest In For 2012?

Dividend Monk, 6 Solid Dividend Payers with Particularly Powerful Brands

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Joining the Yakezie Challenge

I am very happy to annouce that today I have joined the Yakezie Challenge.

The Yakezie is the web’s largest personal finance and lifestyle blog network.  It started in December of 2009, and have since grown to become a thriving community eager to help others.  Yakezie strives to optimize reader’s personal finances and allow people to lead better lives.  Yakezie is over 80 Members strong of individual voices, individual owners and different opinions who have all gone through a 6-month Challenge to join the network.

My goals are to:

- reach a wider audience

- educate more people about the dividend value investing approach

- obtain an Alexa ranking of less than 200,000 (why? because a love challenge)

Wish me luck!

The Secret to Successful Investing Can Be Reduced to Two Simple Words

“The secret to successful investing can be reduced to two simple words: know value.”  These famous words were uttered by Arnold Bernhard more than 25 years ago.

Here is an excerpt from the December 2011 edition of Investment Quality Trends (p. 10):

My friend Dr. Mark Skousen recently presented me with a copy of The Maxims of Wall Street, his collection of “old Wall Street chestnuts, proverbs, slogans, poems, and aphorisms, drawing from experiences in the marketplace and reading dozens of books about Wall Street lore and legend.” One of the vignettes is titled A Rich Man’s Pearl of Wisdom #2, “Two Little Words.”

“When I was a young man, I had the opportunity to meet one of Wall Street’s legends, Arnold Bernhard, founder of Value Line Investment Survey, called “the most trusted name in investment research.” Bernhard pioneered Value Line, famous for its one-page assessment of publicly traded companies.

We had lunch together at his offices on 3rd Avenue in mid-Manhattan, and I shall never forget the occasion. He was in his late eighties by then and had only a year or two to live. Bernhard wanted to talk about his offshore properties in the Bahamas (I lived in Nassau for two years, 1984-85), but I had a more philosophical interest.

I asked, ‘Mr. Bernhard, you have lived a long, successful career on Wall Street. If you could reduce your approach to investing to one sentence, what would it be?” He reached for his cane, stood up, and walked slowly toward the window overlooking 42nd Street. “Young man,” he said deliberately, “the secret to successful investing can be reduced to two simple words: know value.”

He said that everyone on Wall Street knew the prices of stocks and other assets, but few understood what these assets were really worth, or what they would be worth in the future. Paraphrasing Oscar Wilde, Bernhard declared, ‘Brokers, security analysts and investors – the whole lot – know the price of everything and the value of nothing.”

According to Bernhard, investors have no sense of history. They know little about what makes markets move and are only successful as long as the trend doesn’t change. But what happens when the trend changes and a bull market turns into a treacherous bear market, or vice versa? “Then people find out what real values are!” concluded Bernhard.”

Kelly Wright of Investment Quality Trends continues to write:

 If the sole purpose of investing is to realize a return on investment, there is nothing more immediate and fundamentally representative of value and a return on investment than the receipt of dividends.

Of the three fundamental measures of value, price-to-earnings (P/E), price-to book value (P/B), and dividend yield, the dividend yield, which exists only if there is a receipt of dividends, is the only measure of fundamental value that is tangible. This is to say that you can’t spend or reinvest a P/E ratio or a P/B ratio; you can only spend or reinvest cash.

Fundamentally then, the underlying value of a stock lies within its dividend, which determines yield.

In a world of unanswered questions what I do know is this; great, high-quality companies with long track records of performance, over time, increase their dividends and reward shareholders with higher stock prices. To be sure the journey is often bumpy; investing is no greeting card commercial. At the end of the day though, investing in the stock market really is about those two little words; know value.

The complete article appears in the 2011 December first edition of Investment Quality Trends on page 10.

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Is Earning More in 2012 Your New Year Resolution?

A recent study* showed that “earning more” is at the top of most people’s mind when it comes to making new year resolutions. Earning more than last year is a good goal to have, but how do you achieve it? Education is the key, the right knowledge will help you make wise investment decisions which will lead to more money. But first, why is this goal important to most people?

What do all these things have in common?

• donating to charity
• spending more time with family and friends
• going on vacation
• reading
• renovating your place
• having a BBQ
• listening to music
• going on a date
• hosting a party
• going to a party
• going out for drinks
• sailing
• golfing
• playing hockey
• playing soccer
• going to the movies
• joining a gym
• doing yoga
• sking
• taking a road trip
• camping
• taking piano lessons
• going to a hockey game
• eating out
• going to the movies
• going to a concert
• taking time off from work
• building a deck

What do all these things have in common? All these things require money. No wonder “earning more” is on top of most people’s mind. Education is the key to earning more, I’m taking about earning more passive income. Aside from this blog, I recommend you take a look at these to help you grow your investing knowledge:

Dividend Mantra

Dividend Ninja

Dividend Partisan

Dividend Growth Investor

Dividend Monk

....and many more (see the list of Blog I Like on the right side of this page), including my blog Simply Investing!

In addition I recommend the following books to help you learn how to invest successfully:

Dividend Don’t Lie

Dividend Still Don’t Lie

The New Buffettology

The Investment Zoo

Lastly, my Simply Investing Course is the quickest way to learn everything you need to start building a stream of passive income (composed of dividends). I’ve already spent years reading books, interviewing other investors, and through trial and error to learn how to invest responsibly. You can simply take advantage of my experience and get a jump start on your own investing education. Make 2012 the year of earning more!

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*This study was conducted by me, by asking family and friends what their New Year resolutions were for this year. Sorry if this was not the huge well-funded researched study you were looking for. :)

Dividends make up 43% of S&P 500 historical returns

Preet Banerjee from WhereDoesAllMyMoneyGo.com recently posted a great article showing that dividends have made up 43% of S&P 500 historical returns. What does this mean for you? More dividends (money) in your pocket, more passive income!

Dividends are also a great safety net from poor management. It is difficult for investors like you and me to know when a CEO of CFO might be lying or if the statements have been altered. However once a dividend has been paid it can not be taken back.  Here's a great personal example, I purchased TRP in 2000 and since then I've received enough dividends to equal my initial investment. My investment in TRP has been completely paid off!

Focus on dividends and you will do very well for yourself.