Like I said - rich folks. With only one kind of income. They own quite a few Canadian stocks. Suppose the stocks pay them an income of $46,000. Suppose, now that the prices of bank shares have gone down quite a lot recently, they have about $660,000. invested that are paying 7%, to produce $46,200. last year. [Caution: I would not want to see someone with a substantial amount invested have chosen to invest it all in one company - way too risky!] When the single person calculates his/her tax load ... it'll be zero. If the "taxpayer" has a low-income spouse with some tax credits to transfer ... or makes some political contributions ... or donates some to a registered charity (and the credit is at a high rate when one contributes over $200. per year) ... or pays upwards of 5% of net income in eligible medical/dental expenses ... the tax-free amount goes even higher. You may have heard me say in some of my posts that I don't like earning interest - the number of underlying invested dollars can't grow. And the only income that it produces ... is produced now ... and it's taxed now ... at top rate. If you have stocks of Canadian companies that pay dividends and have other kinds of income, the tax-free amount reduces rather rapidly ... but you'll pay tax on the dividend portion at a much lower rate than that on most other kinds of income. If this doesn't explain it adequately, ask and I'll try again. Perhaps if you check the link and read carefully, you'll find it explained a little differently and in a way that'll be clear to you, over there. ole joyful

Hayjud, if it's going to cost us $700 a month for health insurance, then we could never retire. He can keep insurance through his company when he retires, but we don't know how much that is going to cost us. If he would only get out of this manager's job, he could stay with the same company and work 32 hrs. a week, and still be full time. I think though he wants to quit this company completely and I can't blame him. He has worked there for 35 years. He works for Kroger grocery chain as a produce manager. Our son doesn't understand why a "produce manager" job is so demanding, but I try to tell him it's the lack of help that they give him that makes it so difficult. He should have never taken this manager job because of his depression and I have always regreted that he did. I think he even regrets it now. Kroger does all this great advertising about how they help people with the food drive at Xmas, etc., yet they have reduced their employees' insurance and have practically taken away the dental coverage. We only have $1,000 a year in dental coverage and that's it. He is real bitter toward Kroger, yet he kills himself to do a good job for them. I just can't understand the logic behind this and it really gets to me sometimes. I just tell myself that he is from the "old school" of the people that still care about doing a good job. We had a wonderful vacation. I just can't believe the difference in his attitude and his behavior. We had to come back home so he could be back at work on Sunday. He won't miss a Sunday because it's all overtime. He left at 3:30 and got home at 4:30. He does this every Sunday and when he gets home, he sleeps all evening and it's just like he's not even here. I think he said 20 words to me all last night and some of the words were "are my clothes ready for in the morning?" This morning, Monday, he left at 4:30 but he never had to be at a meeting until 6:00 a.m. This meeting is at another store, so he went to his store so he could work an hour before he had to be at the meeting. This really burns me up inside that he does this, esp. when they won't give a dam about him when he retires (for that matter, they don't care now how much he kills himself to do the "perfect" job). If I say anything, he gets defensive. As for the land, if we do buy land it is only going to be one acre and no more. That's one reason why we are selling this house. We had 3.5 acres and we gave one acre to our youngest son. We still have 2.5 acres and all of it is grass and has to be cut. Personally, I am hoping we find a house already built so we don't have to worry about where we're going to live while a house is being built and storing our furniture. We've already done that once when we built this house. I really enjoyed being around my DH when he was so relaxed. He is like a different person. We worked really hard around the house for 3 days, then we took 2 days off. I look forward to more days like this, just being able to see him relax more. We don't like much more having it ready. We are having a garage sale this weekend. My future DIL and son are going to help me and what doesn't sell, goes to Salvation Army. Would it be terrible if I set a date when we will put this house on the market, so we can go ahead and get it sold?

Ya right Most Canadians don't have dividend income. Most Canadians don't have near the money set aside to retire at 45 and live for 20 years with no income. Most Canadians take their Canada Pension early, because it gives you income for 5 years before the Old Age Pension kicks in. Go whistle up another tree and start living in the real world. Anyone who needs your information is rich enough to have a money manager and not need your information at all.

Hi again, all you Canadians, Suppose, when the bank stock was at about $105.00, I'd decided to borrow $40.00 using those certificates as collateral (a lot more that the $4.00 original value!), and having certificates issued for the new shares and giving them to the bank to add to the collateral. When the original stock dropped to $68, a drop of about 1/3, (thanks almost entirely to that dratted U.S. sub-prime mortgage debacle - smells a lot like a hot shot lender-generated scam, to me) ... that would have been a real "loss" had I lost my nerve and sold it. If I'd used that $40. to have bought more stock of the same bank (not a good idea - best to own a variety of issues), that $40. stock value bought with the loan, having also declined by 1/3, to $26, would, added to the $68 of the original, produce $92.00 total current value ... more than double the $40.00 that I'd borrowed. So I'd have avoided a margin call on the loan, i.e. bring in some money to reduce the lender's loan to below 50% of total asset value, or more shares to add to the worth of the collateral ... by late today, tomorrow at the latest! And it would have been a lot wiser had I had stocks in about three not only actual companies, but types of industry, used as the collateral: less risky ... or, rather, spreading the risk over a wider area. Also, I still owed the bank $40. .. but the asset that it had bought was now worth only $26. By the way: note this aspect of calculating. The stock price dropped from 105 by a third to 68 ... but it's gotta gain by a half to break even: 68 + 34 = 102. It's a quality stock - it'll recover. I've got time to let it happen ... well, if, at 79, I don't, the executor of my will does. Neither of my major beneficiaries are under any more pressure to liquidate under pressure than am I. The pressure would be to pay income tax, about a year or slightly more later ... and there are other assets at close to real value to take care of that. Or, if everything were undervalued, she could use some of them to borrow to pay the tax, repaying the loan after recovery ... but the trouble with that would be that the loan interest wouldn't be deductible. Further to the rule of 72. At the price of $68., the stock price has doubled from the original $4.00 or so about 4 times: 8, 16, 32, 64. When one divides the 41 year period by the number of doubles, or 4, one gets 10.25, i.e., it took 10.25 years on average to double. Divide 72 by 10.25, one gets 7.02: the growth rate of the basic asset was about 7%. On the other hand, if you know the rate of interest that you expect a certain investment to achieve and divide that number into 72, say, 6%, you'll get a result of 12 ... it'll take your investment about 12 years to double (with no allowance for erosion of the income by tax, or of the value of the asset by inflation). In addition to the approximately 7% growth rate that my bank shares achieved, over the years they paid me about 3% in dividends, for a total growth rate of 10% or so: not too shabby ... especially when it's tax-advantaged, deferred and also tax-advantaged. And the annual rate of dividend grew since my last report to $3.48, which I think that they will make a strong effort to maintain, despite the drop in value of the stock. If they drop it back somewhat, it'll likely hit the stock price for a while, but I won't cry too hard. Earlier, at $105., or 4.5 doubles (8, 16, 32, 64, 128), dividing the 40 years by 4.5 gives 8.888, which is the rate of growth that the stock developed. Add about 3% or a little more of dividends that the shares paid over the years, and you get a total growth rate of close to 12%. I can handle that ... especially when I remember that I pay a low rate of tax on all of those dividends. I use the full amount earned by the loan-purchased stocks, plus part of that earned by my original cash amount invested to pay the interest on the loan, which interest is deductible (as it would not be were I to borrow to purchase an RRSP) and I think that you may get an idea of the reason that I prefer non-RRSP investing in a number of situations. Especially since, were I to cash out at either $105. or $68., after I deducted the $4.00 of original investment, I'd get half of the difference with no tax liability. But every dollar that I withdraw from an RRSP (or successor RRIF after age 69) ... gets added directly to income, and taxed at regular rate. If you can't avoid tax, defer it. But if you can pay some tax now and not only arrange for ongoing income to be taxed at a low rate ... but defer a substantial portion ... and then arrange for a major portion of it to be tax-free ... so much the better. So ... I think that sometimes it makes sense to pay some now, in order to arrange major tax benefits ... not only ongoing ... but later, as well. Not only that, when you have a major portion of your assets in an RRSP ... ... supposing that you need some money during those years of living and want to ask your lender for a loan. Can you use your RRSP assets as collateral for a loan? Officially, no ... unless you have a very accomodating lender, who'll make one without collateral (since they already carry your RRSP). Some will - some won't. Even so, the rate of interest might be higher. Good wishes for increasingly effective management of both your income and your assets. ole joyful P.S. Have you read my thread somewhere around here that outlines how to borrow to invest at almost no net cost (without making any allowance for possible increase in value of the invested asset)? Plus another asking which ordinary person/investor gains from the erosion in value of one's investment by inflation? o j