The financial market in Canada offers various options to individuals seeking to invest their money, and Bankers acceptances are one of these options. This article will describe some of the many benefits of entering into a banker's acceptance agreement.
The number of bankers' acceptances issued by banks has seen a very steep increase this year, displaying the largest increase in recent years. The latest available figures show an entire one percent increase on the number of bankers' acceptances issued in this year alone. In the current financial climate, while most growth in the financial sector has slowed down immensely, the demand for bankers' acceptances has remained high, prompting banks to tighten up the rules and regulations currently governing this financial option.
In theory, a bankers' acceptance is similar to a low-cost business loan; however, they are increasingly being used as financial investments. These acceptances are most often short-term agreements, and as a result, investors are typically commercial banks rather than private investors. However, it is also possible for private investors to invest in bankers' acceptances. Investments can be made directly, or they can choose to invest indirectly by placing their money in a money market mutual fund. This money is then loaned to other investors at a higher rate, while the original investor continues to earn interest. Such investments are actually traded at a lower face value, but since the bank holds all liability, investors enjoy the advantage of not having to take on any risk, which makes them an extremely attractive investment option to risk averse investors.
Recent reports also display a major increase in investments made in companies trading in : Flow Through Shares this year. Investing in flow through shares is often a popular choice for companies dealing in Oil Gas Stocks because these companies are able to pass the tax breaks they receive on to investors. Investors who qualify for these tax breaks are then able to claim the full amount of their original investment on their tax return. An increasing number of companies throughout the country are offering investment via flow through shares, and an increasing number of savvy investors are cashing in on this option. It should be noted that the tax breaks are more exaggerated for individuals in the highest possible tax bracket, however, flow through shares are still a great investment opportunity for most individuals.
Investors are also using registered retirement savings plans (RRSP) at an increased rate. These accounts allow investors to save for retirement, while also saving on the amount of taxes paid. Individuals can make contributions to an RRSP up until December 31st of the year which they turn 71 years of age. These contributions can be made up to the annual RRSP limit, which is $22,000 for 2010. Income earned on RRSP's is usually exempt from tax while the money remains in the fund; however, any withdrawals or payments received from the plan will be made taxable. If interested in starting a registered retirement savings plan, RRSP accounts can be set-up through most banks, credit unions, or insurance companies.
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