Tools & Glossary provides some great savings tools and a glossary to explain terms you may not know.
Mortgage: A mortgage is a temporary and conditional pledge (contract) or debt instrument, secured by the collateral of a specific property, that the borrower is obliged to pay back over a certain amount of time. People who wish to make large value purchases of property without having to pay the entire amount outright will use them.
Mutual Fund: A mutual fund is a fund, usually in the form of an investment company, in which shareholders pool their money to purchase different types of investments. Shareholders share the income, expenses, gains and losses that the fund makes on its investments. They can be relatively low-risk and relatively lucrative.
Portfolio: A portfolio is a group of investments, like RRSPs, mutual funds and stocks, held by an investor, investment company or financial institution.
RESP: An RESP is a Registered Education Savings Plan. Contributors (parents, grandparents, etc.) can set up an RESP for a beneficiary (child).The RESP program is sponsored by the federal government, and is a means to save money for a child’s post-secondary education. Once the beneficiary is over 18 and attending a post-secondary education institution, he/she receives educational assistance payments through the plan. If the child doesn’t attend post-secondary education, the money can be used for a brother or sister. You can usually withdraw your personal savings tax-free with any grants returned back to the government. For more information, click here.
RRSP: An RRSP is a Registered Retirement Savings Plan. It is regulated by the federal government (the Canada Revenue Agency or CRA), and allows contributors to save money now, in order to enjoy retirement years later. They are both tax deductible and tax deferred, meaning not only do investors get a tax credit on their purchase of RRSPs, but holders don’t pay tax on the money invested or money earned until they are withdrawn. They can be made up of bonds, stocks, mutual funds, GICs, contracts and even mortgage-backed equity. For more information, click here.
Tax-Free Savings Account (TFSA): Starting in 2009, every Canadian resident 18 years of age or older is eligible to save or invest up to $5,000 every year in a TFSA which is regulated by the federal government. Investment income or capital gains earned in a TFSA are not taxed. Withdrawals are also not taxed, do not impact federal income tested benefits (like Child Tax Credits), and are added back to your contribution room in the next year. They can be made up of bonds, stocks, mutual funds, GIC or a savings account. For more information, click here.
