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brin_bellway[cw: what it says on the tin]
[Boomer and Echo; Wayback] (by Robb Engen)
Boggled by this guy tying himself in knots over what framework to use for how to think of RRSP contributions and associated tax rebates.
Why would it matter? Either RRSP index-fund shares are the most urgent of the purchases that need making or they aren't! Either you have RRSP contribution room remaining or you don't! Why would there be anything more to the decision to make an RRSP contribution than that?
Why would it be vitally important to view tax rebates as being a certain kind of special, and ruinous to view them as being a *different* kind of special? Why view them as special at all? I just treat tax refunds as cash inflow. Like any other cash inflow, they're put wherever they're most needed: in many situations, the place they're most needed is in one's RRSP, but I don't see why that would be magically more true just because you got that cash through RRSP-related methods. Neither is it somehow cheating to spend them on groceries or home insulation, if that's where they're most needed.
...hmm. I guess maybe if you're allowed to hold CAD-denominated index funds in TFSAs and non-registered accounts without it being a massive, expensive pain in the ass, the tax framework might be important when deciding *which account to prioritise* putting money into? But if *I* want to buy VEQT or XGRO or what-have-you, I have extra reasons making RRSPs the obvious winner, with no need to decide what knots to tie my mind into about it.
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[Asset Builder; Wayback] (by Andrew Hallam)
I...think this one is *also* maybe showing its PFIC privilege? Or maybe it's just being generally narrow-minded, albeit in a way that's easier to get away with with PFIC privilege.
I entirely agree that one should not go all-in on high-risk, high-reward endeavours! But why would you use *bonds*, of all things, as your low-risk low-reward hedge? I have a very limited ability to readily participate in the financial markets and I see no reason why I should waste my precious contribution room on bonds when I can just pursue low-risk low-reward endeavours *outside of my investment accounts*. I can buy house equity! I can buy solar panels! I can buy *more* house equity, seriously, I have *way* more "contribution room" in my HELOC than I do in my RRSP, why the fuck would I buy bonds when the HELOC is *right there*.
Maybe the, like, steelmanned localised version of the idea he's trying to convey is "if my savings rate is under 18% for a significant length of time *after* I reach the 'fill out RRSP' entry on the List, I should consider putting some of the incoming savings in the HELOC rather than putting all of it in the RRSP". I suppose that will indeed be worth some serious thought if I find myself in that situation. I think I'll wait until I reach that part of the List before coming to a decision on that, though: who knows what my finances will look like by then.
[Boomer and Echo; Wayback] (by Robb Engen)
Boggled by this guy tying himself in knots over what framework to use for how to think of RRSP contributions and associated tax rebates.
Why would it matter? Either RRSP index-fund shares are the most urgent of the purchases that need making or they aren't! Either you have RRSP contribution room remaining or you don't! Why would there be anything more to the decision to make an RRSP contribution than that?
Why would it be vitally important to view tax rebates as being a certain kind of special, and ruinous to view them as being a *different* kind of special? Why view them as special at all? I just treat tax refunds as cash inflow. Like any other cash inflow, they're put wherever they're most needed: in many situations, the place they're most needed is in one's RRSP, but I don't see why that would be magically more true just because you got that cash through RRSP-related methods. Neither is it somehow cheating to spend them on groceries or home insulation, if that's where they're most needed.
...hmm. I guess maybe if you're allowed to hold CAD-denominated index funds in TFSAs and non-registered accounts without it being a massive, expensive pain in the ass, the tax framework might be important when deciding *which account to prioritise* putting money into? But if *I* want to buy VEQT or XGRO or what-have-you, I have extra reasons making RRSPs the obvious winner, with no need to decide what knots to tie my mind into about it.
---
[Asset Builder; Wayback] (by Andrew Hallam)
I...think this one is *also* maybe showing its PFIC privilege? Or maybe it's just being generally narrow-minded, albeit in a way that's easier to get away with with PFIC privilege.
I entirely agree that one should not go all-in on high-risk, high-reward endeavours! But why would you use *bonds*, of all things, as your low-risk low-reward hedge? I have a very limited ability to readily participate in the financial markets and I see no reason why I should waste my precious contribution room on bonds when I can just pursue low-risk low-reward endeavours *outside of my investment accounts*. I can buy house equity! I can buy solar panels! I can buy *more* house equity, seriously, I have *way* more "contribution room" in my HELOC than I do in my RRSP, why the fuck would I buy bonds when the HELOC is *right there*.
Maybe the, like, steelmanned localised version of the idea he's trying to convey is "if my savings rate is under 18% for a significant length of time *after* I reach the 'fill out RRSP' entry on the List, I should consider putting some of the incoming savings in the HELOC rather than putting all of it in the RRSP". I suppose that will indeed be worth some serious thought if I find myself in that situation. I think I'll wait until I reach that part of the List before coming to a decision on that, though: who knows what my finances will look like by then.
no subject
Date: 2022-02-21 02:37 pm (UTC)no subject
Date: 2022-02-22 02:00 am (UTC)(Wish I had the spoons to be operating at this level, I'm notionally in favour of this stuff (as in, thinking about finance at this level of complexity) but still at "messing with money and accounts is stressful and my stress budget is limited")
Also: wow literally 30 seconds before writing this comment I was just telling a friend about how bad American taxation is, based in part on stuff you've told me.
no subject
Date: 2022-02-22 05:58 pm (UTC)On the bright side, at least that means I have a good sense of what I'd do with a windfall to best improve my household's resiliency for the future, rather than getting blindsided by it and ending up wasting it (as is apparently a common problem among people accustomed to living-paycheque-to-paycheque!poverty). My plans progress at whatever speed I can afford: if I get more money dumped on me, it simply hastens what was already in progress.
no subject
Date: 2022-02-23 02:27 am (UTC)