The INTEGRIS Risk Free Rate of Return

by Jean-Pierre Laporte July 14, 2012
Value can come from different sources. Very often, the skill of an investor will generate higher return and the value is said to be due investment management. Some call it the "alpha". Another source of income that is often overlooked, is the ability to reduce one's tax exposure. People contributing to RRSPs are familiar with the fact that by having reduced their taxable income (after contributing to the RRSP) the government has to issue a tax refund. The tax refund is money in one's pocket that has been achieved without any exposure to the vaguaries of the stock market.

In short, it is an internal rate of return that doesn't depend on how well one has invested. After all, your RRSP contributions could be put in guaranteed income certificate and would never lose value (unless eroded by inflation.). While all Canadians can benefit from a risk free rate of return by investing in their RRSP, those that are incorporated can achieve a higher risk-free rate of return if they save through INTEGRIS. The main is reason is that under the INTEGRIS Plan, the ability to take tax deductions is greatly enhanced and a number of deductions that are not available in an RRSP are open to clients of INTEGRIS: top up payments, deduction of fees, interest paid on borrowing etc. Obviously, if you are good at investing, or have a good advisor, you can increase your rate of return through good investment choices, unfortunately, this source of income is not typically 'risk-free' since it implies some degree of exposure to market volatility.