Thursday, March 5, 2015

Finance News

Retiring Early on Tax Refunds

How to hit the beach sooner than planned

By Jason Brown, Envision Financial, a division of First West Credit Union/Submitted photo of Tanya Wilson


t’s tax season and for the majority of Canadians that spells a refund. In 2014, Canada Revenue issued 16.5 million refunds, doling out more than $28 million in total with the average return being $1,697.


While your inclination may be to take your cash from Mr. Harper and escape the dreary doldrums of winter, a poll of wealth investment professionals at Envision Financial reveals that’s not what they are planning to do with their refunds this year.


The poll, which was conducted in February, found an overwhelming majority of investment advisors and financial planners at Envision Financial were expecting a tax refund—50 per cent expect between $1,000 and $5,000 and 41 per cent forecast they’ll receive a return greater than $5,000.


Not surprisingly—being investment experts—75 per cent of them are planning to invest their return rather than pay down their mortgage or go on vacation. Their preferred investment choices include a mix of TFSAs, RSPs, mutual funds, and stocks and shares.


And it’s not that Envision Financial’s wealth professionals don’t like vacation and aren’t winter-weary like the rest of us. Rather, they have the inside scoop on ensuring they have enough money to get them through retirement comfortably.


“I invest the RRSP return money, either in my RRSP for the current year contribution or into my TFSA,” says Tanya Wilson, investment advisor at Envision Financial. “If I spent it then I’d be wasting the tax-deferred benefits of the RSP in the long run.”


According to Wilson, if a 40 year-old earning $60,000 per year gross income makes a $5,000 RSP contribution every year and re-invests the approximate $1,500 tax return they’ll receive into a TFSA, they could potentially retire two years earlier.


“Just by funneling their RSP money into a TFSA and then investing into medium-risk mutual funds—with an average of 6.5 per cent growth over time such as stocks and mutual funds—they can retire at 63 years old instead of 65.”


With the prospect of early retirement looming, who wouldn’t want to choose a chance to take early retirement over a week’s trip to Palm Springs?



About Envision Financial
Envision Financial is a premier provider of banking, investment and insurance services for residents and businesses throughout the Fraser Valley, Lower Mainland and Kitimat regions. As a division of First West Credit Union, B.C.'s third-largest credit union with 54 branches and 42 insurance offices throughout the province, Envision Financial brings innovative products, an extensive branch network and local decision making to the banking experience. For more information on Envision Financial, visit


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