SaskWorks Venture Fund is still available for purchase in your RRSP until March 1st, 2017 or until it sells out. Take advantage of the 35% tax credit offered from this investment!
Every RRSP season we need a reminder as to the power of these tax credits! Some complain about poor performance of the fund in comparison to other mutual funds as it has a 10-year average of 4.71%. In comparison to other Labour-Sponsored Funds (LSIF) in Canada and the other one available in Saskatchewan, it is in fact, an exceptional LSIF. Once we breakdown the math and pair in the return from the tax credit of 35% ($1750 on $5000 investment), then it even starts to look pretty good compared to a regular equity based mutual fund. Lets break down the $1750 tax credit:
THE POWER OF THE TAX CREDIT! -initial tax credit ($1750 on a $5000 purchase) - 1750 / 5000 = .35 or 35% -must hold this fund for 8 years , so let’s break down what the tax credit looks like over the 8 year period -.35 / 8 yrs = .0438 or 4.38%/year -pair the tax credit return (4.38%) with 10 yr performance avg of the fund (4.77%) - .0438 + .0471 = .0909 or 9.09%
--9.09% AVERAGE RETURN ON YOUR TOTAL INVESTMENT OVER 8 YEARS--
On this 9.09% return over 8 years, 4.38% per year of that interest is a GUARANTEED amount broken down from your tax credit. Not too shabby! Not only does the math make sense on these investments, but every dollar goes back into small and medium sized Saskatchewan companies which will essentially work to help boost our local economy.
-Marty Metz, CFP
CERTIFIED FINANCIAL PLANNER
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