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Reallocating your wealth: taking a look at pools of capital

We all have the same traditional pools of capital, within which Pool five: tax-exempt insurance
to accumulate and invest our wealth and draw income. We This can be an estate strategy and similar to your RRSP, the
have Pension, registered and non-registered assets. Within contributions to the tax exempt policy are limited. However,
the non- registered options are vehicles such as equities, there is much more flexibility with maximum deposits. It
fixed income, mutual funds or ETF’s. Proper diversification is a very interesting tool for asset accumulation and wealth
and consideration of your wealth may help you achieve your preservation. It can add a different layer of diversification to
lifestyle needs/estate/bequests and philanthropic planning all your investments and grows in a tax exempt environment.
in a tax efficient manner that may enhance your wealth. Due to the fact it grows tax free, it can significantly enhance
The Five Common Pools of Capital your overall wealth- the accumulation of wealth along with
your death benefit can be used for many strategies in your
Pool one: your pension income from government, your estate or retirement.
employer or both The tax liability that may be left by your estate through your
This income is taxable while you live – no residual other pools of capital can be paid for with your tax-
estate value and therefore no taxes payable at death free death benefit.
Pool two: your registered investments Due to the tax free death benefit from the insurance
Tax effective way of building wealth for retirement
you can ensure your philanthropic desires are
Limited by the min and max deposits and withdrawals looked after as well as your beneficiaries to your
allowed by CRA estate.
Must mature by age 71 at which time taxable income Tax-exempt insurance can also be used to
is withdrawn (exception spousal rollover) compliment your RRSP and TFSA income. This
Erica Tennenbaum, CFP, FCSI
Estate value fully taxable resulting in the loss of Senior Portfolio Manager & strategy uses a tax free bank loan giving you
50% of the value – depending on tax rate Wealth Advisor the access to a tax shelter, you then purchase an
immediate and significant benefit for your estate
Pool three: tax- free savings (insurance coverage) and continue to maintain liquidity and
Next best option after maximizing Registered assets
flexibility. In the event of death the bank loan is paid by policy
No tax on withdrawals and the remainder of the funds are paid tax free to your named
No estate tax if there are direct or successor beneficiaries beneficiaries.

Limited annual deposits-$7000 for 2024 In summary considering the above pools of capital one can
Pool four: non registered investments diversify, decrease risk and save on taxes. When owning your
own business you have even more attractive strategies to
Full amount of Interest and foreign dividend tax is paid consider using insurance and IPP’s. If you have any questions
annually at your marginal rate regarding the above information or would like to learn more
Cdn eligible dividends have a tax rate of 34%, ineligible at please feel free to email me at erica.tennenbaum@rbc.com
44% Please keep in mind that this is simply a guide to some of the important
Capital gains- 50% of the gain realized is included in your financial considerations for your family over a typical year. It is best to
taxable income at your marginal rate work alongside your professional advisors to ensure you are considering the
best strategies for you and your family. If you have any questions or would
like more information please send us an email at; erica.tennenbaum@rbc.
com or give us a call at 519-621-6297

This information is not investment advice and should be used only in conjunction with a discussion with your RBC Dominion Securities Inc. Investment Advisor. This will ensure that your own circumstances have been considered properly and that action is taken on the latest
available information. The information contained herein has been obtained from sources believed to be reliable at the time obtained but neither RBC Dominion Securities Inc. nor its employees, agents, or information suppliers can guarantee its accuracy or completeness.
This report is not and under no circumstances is to be construed as an offer to sell or the solicitation of an offer to buy any securities. This report is furnished on the basis and understanding that neither RBC Dominion Securities Inc. nor its employees, agents, or information
suppliers is to be under any responsibility or liability whatsoever in respect thereof. The inventories of RBC Dominion Securities Inc. may from time to time include securities mentioned herein. RBC Dominion Securities Inc.* and Royal Bank of Canada are separate corporate
entities which are affiliated. *Member-Canadian Investor Protection Fund. RBC Dominion Securities Inc. is a member company of RBC Wealth Management, a business segment of Royal Bank of Canada. ® / TM Trademark(s) of Royal Bank of Canada. Used under licence.
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