I know a woman whose daughter talked her into buying lottery tickets. She knows that the odds of winning the lottery are lower than the chance of being struck by lightening. But that’s not why she does it. When she
Nobody knows what the TSX will do over the next three years. Certainly not me. But I think that it’s unlikely to crash again like it did in late 2008 and early 2009. Since that’s the case, I feel more
Anyone can make predictions. It turns out that educated people are no more accurate in their predictions than the unwashed masses. The problem is that they have higher confidence in their predictions, that is to say, they expect to be
Tax-free compounding increases the pre-withdrawal value of a tax-deductible account versus a tax-paid account. After all taxes are paid, assuming a constant tax rate, the results are more similar, although the tax-deductible account still produces a larger value. Tax-deductible accounts are perfect for anyone who will be in a lower tax bracket in retirement. That way, taxes are avoided since the deduction is made at a higher tax rate, and taxes are paid, upon withdrawal, at a lower rate. On the other hand, if the government increases tax rates over time, this expected benefit may be lost or reversed. Even if your tax rate stays the same, different types of income are taxed differently. If capital gains and dividends are taxed at a lower rate than withdrawals from the tax-deductible account, it’s possible that the final value of a tax-paid account would be higher. Finally, taking all of this into account, a tax-paid investment account that allows tax-free growth and withdrawals might be most beneficial of all.
Share ownership should be an effective way to invest your money. Unfortunately, there are many pitfalls, only some of which can be mitigated. Things seem to go wrong when ownership becomes widely dispersed. All of the problems below affect, to