Why saving outside a tax shelter is futile

Most investors are lucky to break even investing outside RRSPs or TFSAs, according to Mercer actuary Malcolm Hamilton.



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Long before the Tax Free Savings Account was created in 2009, Mercer actuary Malcolm Hamilton used to tell journalists like myself that “investing outside tax shelters is futile.”

Has the TFSA changed his view? As you can hear on this audio podcast, not really. After taxes, fees and inflation, most investors will be “lucky to break even” investing outside RRSPs or TFSAs, Hamilton says. However, for those who have filled their tax shelters, non-registered investing may be the only game in town, he concedes, even if it just means a slow “gradually controlled” loss of purchasing power.

If you must invest outside tax shelters, do so not with highly taxed interest-bearing investments but with equities, he adds. And what about the special case of business owners and real estate investors? Click on the link for that:

      Why-saving-outside-a-tax-shelter-is-futile.mp3|titles=Why saving outside a tax shelter is futile

3 comments on “Why saving outside a tax shelter is futile

  1. Interesting interview. Permanent life insurance allows tax-sheltered growth. Is that a good option?


  2. I'd like to see Mr. Hamilton's numbers. Mine are incongruous with his statements. When he mentions fees, I wonder if he's assuming most people pay Investor's Group 3% MERs. Using 0.42% MER self-managed, no-fee mutual funds changes the picture, significantly.


  3. The original statement "Savings in taxable accounts is futile" was wrong. What Mr Hamilton should have done is …
    a) Recognize that he has become a cult guru whose every off-the-cuff comment is worshiped.
    b) Accepted responsibility and retracted the statement with a good-humoured "I take that back."

    Instead he creates here an elaborate re-interpretation to claim that what he said was not false, just not understood correctly. And his circumlocution (?) to provide the justification is just as bad as the original statement.


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