I've been writing a weekly financial column for the past 10 years but took a year off recently. I used the year productively but now it's time to ramp up my business again and I am very excited to get going. So what am I up to these days?

Since selling my client practice in 2007, I've lived a life of leisure and freedom spending a lot of time with my wife and 4 boys. Some called it retirement but I think it was more like a long period of transition. In some respects it was like the "New Retirement" I teach people about from the perspective that I had a lot of time freedom, I was in a good financial position to transition from full time work to part time work and I was very happy living life making my own choices. The only unusual part of it was the fact that I was not even 40 at the time and have 4 children under the age of 6.

What am I up to now?

Without question, that is the most popular question I get these days. So I'll try to keep it as to the point as possible. I continue to do all the things you would expect a financial expert to do except maintain a client base managing people's money. When my kids ask me what I do for work, I simply tell them "I help people when they do not know what to do with their money."

I do that through my life as a professional speaker delivering 1 and 2 day workshops to employees of corporations, organizations and government departments. They hire me and we deliver exceptional workshops without any pitches (which often happens at the end of retirement and financial workshops). People walk away from the workshop filled with light bulb moments inspired to make changes to their lives to become better, smarter, richer people. My big project and focus moving forward is to bring more financial education into the workplace to help both employers and employees enhance their traditional benefit programs with more financial education.

I have also delivered more keynote presentations for conferences and multi-speaker venues. I've got some great topics. I am speaking about 80 days of the year and looking to do more so if you know anyone that wants to hire a seasoned financial speaker let me know. You can find more information at RetireHappy.ca or JimYih.com.

In addition to the speaking, I continue to write articles, books and develop tools to help people make better decisions with their money. As you can see, I have started to blog and I am committed to financial education and helping as many people as I can to become better, smarter, and richer people. This can be seen with my WeathWebGurus.com website which has attracted a lot of attention. In fact, had over 3,000,000 visits since inception of the site. If I include the first version of the site we've had hundreds of thousands of unique visitors. That just floors me. So it is only proper thank everyone that has used the site. On this site, you can get FREE download like my first best selling book MUTUAL FUNDAMENTALS. You can also find my online store where you can find some of my product tools and resources including my software program My Estate Organizer and my other two books Seven Strategies to Guarantee Your Investments and Smart Tips for Estate Planning.

Why did I sell my client practice?

I had a great business with fantastic clients. The business provided me and my family a wonderful lifestyle and there is no question I miss aspects of the business. But if I had to do it over again, would still do what I did? the answer is yes. There were a few reasons I felt it was important to sell the business:

First was for lifestyle reasons. My business was a full time commitment. In addition to that, I had my other 'part-time' jobs like writing my column, writing books and my speaking gigs. Something had to suffer and it was my health and my family. With four young boys and a supportive wife as my priorities in life, selling the business was the opportunity to spend more quality time with my family. There is a old saying that "Children do not want presents as much as they want your presence."

The second reason is I became disillusioned with the investment industry because of the regulators. The regulators have handcuffed financial advisors and institutions with process, paperwork and red tape (with the right intentions I might add). Unfortunately, I was spending more time and money on paperwork, compliance and policies that I was on things that my clients would think are important. In fact, it was becoming more difficult to write my column, books and do my speaking because the regulators look at financial advisors as mutual fund sales peopleas opposed to planning professionals. Instead of looking at my role as a financial educator through writing and seminars, they felt it detracted from my role as a salesperson. I could go on but it was time to re-evaluate my professional life and focus on the tasks that gave me the most enjoyment. The thing I miss most is working with my clients.

Where do I go from here?

As much as I have enjoyed my kids and family, I am looking to spend more time working and building my new business the THINK BOX. In doing so I continue to develop new products and write more books. I am currently working on a retirement book with my colleagues Rein Selles and Tricia French called "10 Things I wish someone told me before I retired."

I'm also excited about developing my latest software project My Legacy Organizer, which is the follow up to My Estate Organizer. My Legacy Organizer is a tool to help people diarize their life story and share it with the people they love. I believe everyone has a story to tell and far too often the great stories and experiences are lost when people die. I believe we all have an obligation to teach other though our experiences, values, and past. I believe this so passionately that I have committed to writing my legacy in a book not because I think I am important but to serve as a sample of why it is important to diarize our legacy. My intention is to use this book solely for the the purpose of raising money for charity. My ulterior motive, of course, is to teach my kids about what I think is important.

I will continue to write my articles and post them on WealthWebGurus.com but will look to distribute them in various media publications. I also plan to continue to blog from time to time through this blog but soon, I plan to be blogging through my revamped website www.JimYih.com. I'm also committed to twittering (@jimyih) and updating facebook on a more regular basis. Someone once told me if you have good information that will help others, then share it with as many people as you can. That's something I will commit to and with new technology, there is no excuse. Lastly, with all the upcoming changes, if you would like to stay up to date with great information, financial tips and updates on what is happening with me, then you can sign up for my Bright Ideas Online Newlsetter.

Working in retirement is not unusual. In fact, it is becoming the norm. The key to my work as I teach it to others is to make sure you are having fun and doing what you want. I plan to work harder in the future but only doing the things that give me personal satisfaction. Freedom is about choice and being able to make the the right personal choices.

Thanks for getting re-aquainted with my professional life. I hope we will keep in touch one way or another

RRSPs are perceived to be one of the best savings vehicles for retirement because of some of the tax benefits of the RRSPs.  That being said, there are more and more people are questioning the validity of RRSPs and whether they really make sense?  Given many alternative uses for money, I outline three great debates of RRSPs.

Debate #1:  RRSP vs Mortgage

Generally speaking, either financial strategy is a good choice. It is better than spending the money on things that have no inherent financial value. It is also better than "investing" (I use that term loosely) in depreciable assets like cars.

Let’s compare the financial benefit of the two alternatives. First, let’s look at the mortgage. Let’s assume that mortgage rates are 6%. You might think that paying down the mortgage means that you forego paying 6% in the future and therefore the mortgage paydown has a financial benefit of 6%. Most mortgages are not tax deductible thus you must earn more than a dollar to pay down a dollar of debt. In fact, you probably need to earn about .50 to pay down a dollar of debt. Thus paying down the mortgage has a pre-tax equivalent of 8.8% (6%/(1-32%)). Remember the higher the interest rate on the mortgage, the more attractive it is to pay down the mortgage.

Now let’s look at the RRSP. Even if you are in the lowest marginal tax rate, you will save around 25% in tax* (combined federal and provincial). In a higher tax bracket, the RRSP might save you as much as 48% in tax savings. The bottom line is when you compare the two; a dollar put toward the mortgage saves you the equivalent of 8.8% while the RRSP saves you at least 25% in tax. Given the choice, I would take a 25% saving over a 10% saving.

One thing to keep in perspective is that this example is overly simplistic because you will have to pay tax somewhere down the road when you take the money out of the RRSP but you also get the benefit of tax deferred compounding as long as the money stays in the RRSP.

One thought is doing both might make the most sense.  You can do this by making the RRSP contribution first and then use the tax savings or refund to pay down the mortgage. For example, let’s assume I have ,000 and I am in a 30% marginal tax rate. By contributing to the RRSP, I should save ,000 in taxes and potentially get that in a refund. Once I get the refund, I should then take the ,000 and pay down the mortgage. I have created ,000 of use out of ,000. 
*Tax rates will vary from province to province.

Debate #2:  RRSP vs non-RRSP


When it comes to investment income, capital gains and dividends have a much better tax treatment than interest. However, is it attractive enough to ignore the benefits of the RRSP?

The two key advantages to the RRSP are (a) the tax deduction and (b) the tax-deferred growth. These two benefits make the RRSP one of the most attractive financial planning vehicles available to Canadians. However, when you pull the money out of the RRSP, you will get taxed. Every dollar you pull out of an RRSP regardless of whether it is capital gains, interest, dividends or your original invested capital gets taxed at your current marginal tax rate.

On the other hand, the non-RRSP is taxed only on growth, dividends and interest. Withdrawing your capital is not subject to taxation. Astute investors will look for investments that generate capital gains and dividends because of the preferred tax treatment.

So what’s the best solution? It depends on your personal situation but most people will still benefit from the RRSP. Let’s take a look at some key factors:

1. Investing behavior. If you are a really active investor and you like to buy and sell, trade or rebalance a portfolio frequently, you may be better off with the RRSP. Outside the RRSP, every time you trade, you create a potential tax disposition. The tax-deferred growth in the RRSP may be in your best interest.
2. Time horizon. Generally speaking, it is rare to see investors hold the same investment for twenty to thirty years (or even ten years). The longer the time horizon, the more you will benefit from tax deferred compounding in the RRSP. It has been said that compound interest is the eighth wonder of the world.
3. Marginal tax rates. It is important to understand what tax rate you are in at the time of the deposit but also know the your tax rate at the time of the withdrawal. This will be easier to estimate the closer you are to retirement. The ideal situation is if you take the money out in a lower tax bracket than when you put the money in.  In that case, RRSPs will always make sense
4. Investment flexibility and freedom. RRSPs have some investment restrictions. Outside the RRSP, there are little to no restrictions of what you can do. While there is still lots of investment flexibility inside the RRSP, there is more outside the RRSP.
5. Overall financial picture. Believe it or not, there is such a thing as having too much RRSPs. In some cases, your RRSPs may be so significant that your future income from the RRSP will push you into a higher tax bracket. In other situations, deferral of the RRSP can create a very significant tax liability down the road.

Remember everyone’s situation is different and you must take the time to assess your personal situation to see what path is best for you. These comments are general statements that may not apply to everyone.

Debate #3:  RRSP vs TFSA


In the 2008 federal Budget, Finance Minister Jim Flaherty, announced what he considers will be historical significance in introducing Tax-Free Savings Accounts (TFSA). Previous to the introduction of TFSAs, saving money could be done either in an RRSP or a non-registered savings account. The newly announced TSFA is a mix between an RRSP and a non-registered account.

RRSPs are attractive because you get an immediate tax deduction for the contribution and any investment earnings are tax sheltered as long as the money stays in the RRSP. On the other hand, the downside of RRSPs occurs when you take money out because you then have to pay the tax.

With TFSAs, you do not get a deduction when you put the money in but you also don't have to pay tax when you take the money out. Similar to the RRSP, you do not have to pay tax on any investment earnings in the TFSA giving you the benefit of tax sheltered investment growth.

With the TFSA, on 00 contribution, you will save to in the first year of contribution from tax sheltered growth. Critics of TFSAs suggest that's not enough benefit to entice people to save and while that may be true, how would you feel if you found on the ground today. I bet it would make your day. I'm of the opinion that any amount of money saved from taxes is in your best interest!

When you compare the benefit of the TFSA with what you would get if you invested in the RRSP, the TFSA may not be as attractive because the RRSP would give you 50 to 00 in tax savings from the initial tax deduction.

However, you can't properly compare TFSA with the RRSP by just looking at the tax savings going into the plans. You also have to look into the future when the money comes out of the plans. With the RRSP any withdrawal is fully taxable. That means a withdrawal of 00 might only net you 0 to 0 after tax depending on your marginal tax rate. With the TFSA if you take out 00, you get the full 00.

The bottom line is RRSPs still make sense if you are saving long term for retirement and your income at the time of withdrawal is in a lower tax bracket than your income at the time of contribution into the RRSP.  Here’s a great rule of thumb to follow:

1. If your marginal tax rate at the time of contribution is greater than your marginal tax rate and the time of withdrawal, then RRSPs have the advantage.
2. If your marginal tax rate at the time of contribution is less than your marginal tax rate and the time of withdrawal, then TFSAs have the advantage.
3. If your marginal tax rate at the time of contribution is equal than your marginal tax rate and the time of withdrawal, then neither has the advantage.

This article first appeared in Jim Yih's 2010 RRSP Kit which can be downloaded for free on his website.  All of my articles and blogs appear on my website www.WealthWebGurus.com.  Check it out, there's lot of free information there.

Canada Pension Plan (CPP) is one of the pillars of retirement income benefits for Canadians. For the past 20 years since I have been in the financial industry, there has always been a perception that CPP may not be there in retirement.

Is the CPP in crisis?

That's what we've been led to believe for the past 20 years but the hysteria about the CPP s more of a myth than reality. Back in 1996 when there was tremendous fear that a looming pension funding crisis might cause the collapse of CPP. At that time, CPP received billion in contributions but paid out billion in benefits, with an asset base of about billion. Unless something was done, the plan's collapse would be only a matter of time. The solution was to make some significant increases to the contribution rates and the creation of the CPP investment board to allow funds to be invested into market based securities.

CPP has come a long way since then. Today CPP is in a strong financial position and Canadians should feel good about CPP being there when they retire. Here's some of my thoughts about why I think CPP will be there in the future.

• In 2009, the total assets of CPP sits at about 6 billion dollars and is expected to continue to grow from increased contributions and investment income.
• Back in 2000, The chief actuary of Canada, who reviews the health of the CPP every three years, said in his 2000 report that CPP is sound for at least 75 years. CPP continues to operate on the basis of a 75 year amortization period.
• The CPP reserve fund is segregated from general government revenue. In other words, CPP is a separate pot of money that belongs to all Canadians that have contributed to CPP. All Fund assets belong to CPP contributors and beneficiaries.
• CPP is a pay as you go system. Part of the money that is paid into CPP through contributions is used to fund the money leaving CPP for retirement benefits. If there is not enough money to fund the outgoing funds, CPP can simply increase contribution amounts which has been a significant reason for the growth of CPP in the last 10 years.
• The CPP was reformed in 1997 to stave off a funding crisis. And now, there is a surplus of contributions every year. In other words, there is more money coming into the plan through contributions than money going out as a result of benefits being paid to Canadians.
• CPP is about to undergo some more significant changes to help preserve the longevity of this key asset. I will discuss some of these proposed changes in a follow up article next week.

Despite the good news, it seems that most Canadians still think CPP may not be there in the future. In fact, public opinion research conducted last month shows that almost two-thirds of Canadians are still unaware that the CPP was successfully reformed 10 years ago.

In terms of your own retirement planning, I think you should incorporate CPP into your plans and assume you will get something. The best way to figure out how much is to simply contact Service Canada to get your CPP statement of contributions.

This article first appeared on my website www.WealthWebGurus.com.  Go and check out other articles on Canada Pension Plan or other government benefit programs.