Tuesday, February 28, 2012

How to Build Your Wealth - Let Your Government Help You

Income tax time is soon approaching in North America.

Many individuals will be investing in their government tax deferred savings plans. They do this mainly to get the tax deduction on last years' tax return.

The focus of advertising for these plans is geared mainly at the tax savings and to provide a retirement income for your future. The problem is, none of the advertising tells you the real truth about these programs. These tax deferral programs are just that. They defer your tax to a later date when you withdraw funds. They are not tax shelters as many individuals are led to believe.

Let Your Government Accelerate Your Wealth

There is, however, one way you can make these plans work in your favor.

Calculate the amount of tax you will save by investing in the plan. Now, take this amount (which is paid to you by your government) and invest this as well.You can invest this within the plan itself or outside the plan as you wish. The choice is yours.

By doing this, your government will actually be helping you to grow your wealth at a faster rate.

When it comes time to withdraw an amount from the plan, you will have already made money on the tax portion that you already received. In essence, you will be making money on your future tax payable.

Wacky or What

A wacky concept perhaps, but one that should be considered if you are planning to contribute this year to your governments' tax deferral plan.If you don't use this concept, then you are truly just deferring your tax to a later date. The only other benefit of course would be the increased profits for your bank or financial institution.
As we all know they do need the extra income, don't they.

As you can probably tell, I am not a big fan of banks and financial institutions. They are always in business for themselves first, remember that.

Use Your Future Tax Dollars

Use the above concept and you will be investing your future tax dollars. It is new found money anyway, so what is the real cost ? That's right it's ZERO. What will your return on that investment really be ? That's right it's INFINITE. You do the math.

Let me guess. If you don't do the above with your tax refund, what will you do with it ? I know, you'll spend it of course. Opportunity lost.

As always, I welcome your comments and suggestions for future topics.

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