From: Canuck57@nospam.com   
      
   Yes, RRSP/LIRA/RDSP are glorified tax traps.  Only TFSA comes without   
   inflation taxes and thus TFSA and cash accounts should be your primary   
   saving methods.   
      
   Except in rate cases, these RRSP/LIRA/RDSP plans should be avoided at   
   all costs.   
      
   Rare cases being you are going to donate the whole thing for charity or   
   are planning some unpaid years off and using it for income averaging.   
   But for 95% or more of the people out there, they are tax traps.   
      
   The big trap is in death.  A $200K RRSP is fully taxable at top rates, a   
   TFSA isn't taxable so the after tax to the estate differences are much   
   larger than the tax deferment.   
      
   Even cash accounts outperform RRSPs in after tax and inflation taxes.   
   As RRSPs gains that pace inflation are 100% taxable and thus devalues   
   the RRSP after tax yield as it grows.  With cash accounts you get lower   
   tax rates on gains and dividends and spread the earning over years at   
   generally lower rates.   
      
   An example:   
      
   I invest $10,000 in RRSP, and $10,000 in TFSA.  I get a current credit   
   of $2,500 for the RRSP as it is tax deferred.   
      
   30 years goes by and 300% inflation.  Each is now worth $40,000.   
      
   But after taxes of 25% is applied I get after tax $30K from the RRSP and   
   $40K from the TFSA.  That $2,500 tax deferment comes due at $10,000.   
      
   The crux of this boils down to tax on inflation.  As your investments   
   grow, much is due to inflation and not any real material wealth gain.   
   But the inflation component is taxed requiring larger than inflation   
   incomes to offset or you lose value.   
      
   Big scam, so if an advisor advises RRSPs, tell tehm they are tax traps.   
      
   Another scam, disabled.  You put in $200K that with inflation coverts to   
   taxable income on withdrawal.  Most disabled would be better declaring   
   the income in cash accounts of say $12K a year, as this wouldn't be   
   taxed much if at all.   
      
   Bottom line, unless you are doing income averaging expecting no income   
   years, or donation planning, RRSP/LIRA/RDSPs make no sense at all.   
      
   One exception though for RDSPs, if government adds money, do it but only   
   to a point where government adds money. After that the tax trap effect   
   isn't good.   
      
   Unless RRSPs are taxed at a lower rate, say 50% you are better off with   
   a TFSA or cash investment account.   
      
   Added bonus, if you want the central America hideaway or cottage, TFSA   
   and cash accounts will have a less negative taxing effect than the RRSP,   
   as it leaves you in a more flexible situation.   
   --   
   Liberal-socialism is a great idea so long as the credit is good and   
   other people pay for it.  When the credit runs out and those that pay   
   for it leave, they can all share having nothing but debt and discontentment.   
      
   --- SoupGate-Win32 v1.05   
    * Origin: you cannot sedate... all the things you hate (1:229/2)