What You Need To Know About Pensions And Investments

t some point in your life, you will definitely start considering purchasing a home for yourself and your family. And when you finally decide to work with a mortgage broker and make a down payment on a home, doing so may take up a significant amount of your monthly income. It is at this point when having a little extra funding on the side can make a huge difference.


Basic Information

You have probably heard of pensions before. Basically, a pension is a retirement fund that you save for when you start working. Sometimes, employers will provide you with a full pension. There are cases when companies shoulder half of the payments and you make the rest of the monthly contributions to the account. The great thing about pensions is that they are not only for the purpose of having savings but funds that can be used for investing as well.


Early on, it will be wise for you to start building your pension, even if you have to do it on your own. There is such a thing as TFSA. What you have here is a tax-free savings account that can help you grow your money over time. If you avail of such an account, your money will not only be placed in a safe but will actually be invested into a variety of channels.


Usually, TFSAs are used for mutual funds, stocks and bonds, GICs (guaranteed investment certificate), ETFs (exchange-traded funds), and equity investments. It is pretty easy to set up an account like this as the registration process mimics that of your typical savings account application. And although interest rates on such an account are not something worth bragging about, they make up for it by providing you with secured growth sans high investment risks.


Once you have applied for an account, you can arrange for a direct deposit to be made into your TFSA account, from a payroll account perhaps. Every month, the bank will transfer an amount of your choosing to this account and the accumulated funds will then be invested at a fixed annual return rate. You have the ability to increase your monthly allotment.


And since it provides tax-free earnings, whatever amount you end up with upon retirement will not affect your taxable income. You can then use these savings to finance a home. Aside from not having to worry about taxes eating up your house fund, working with a dependable mortgage broker will also ensure that you get the best deal on your chosen property, hence more value for every dollar you invest.


There are other pension-related accounts that you can choose from. Others offer higher earnings but with higher risks, and of course, full-on taxes. If you are interested in something that will offer a good tax-free return, then this is the ideal account to consider, especially if you are someone who is risk-averse. For even more information on pensions and tax-free savings accounts, do speak with your trusted financial adviser and have him assess your financial position.