Comments on: Last Minute RRSP Buyers? I am Guilty. http://www.diyfinances.com/2006/02/27/last-minute-rrsp-buyers-i-am-guilty/ Take control of your finances. Wed, 07 Jan 2009 01:47:45 +0000 http://wordpress.org/?v=2.5.1 By: John http://www.diyfinances.com/2006/02/27/last-minute-rrsp-buyers-i-am-guilty/#comment-39 John Wed, 08 Mar 2006 16:23:14 +0000 http://www.diyfinances.com/2006/02/27/last-minute-rrsp-buyers-i-am-guilty/#comment-39 Hi Joe: I agree. It comes down to personal choice and what rate of return you earn inside your RRSP. I have been doing better than 8% lately so it has made sense for me. I read your post to RSP or not RSP. Excellant work. I very much agree with you that RRSP salespeople use scare tactics to generate sales. It is my opinion that you need to be very leary of their advice! Hi Joe:

I agree. It comes down to personal choice and what rate of return you earn inside your RRSP. I have been doing better than 8% lately so it has made sense for me.

I read your post to RSP or not RSP. Excellant work. I very much agree with you that RRSP salespeople use scare tactics to generate sales. It is my opinion that you need to be very leary of their advice!

]]> By: Average_Joe http://www.diyfinances.com/2006/02/27/last-minute-rrsp-buyers-i-am-guilty/#comment-37 Average_Joe Wed, 08 Mar 2006 01:45:24 +0000 http://www.diyfinances.com/2006/02/27/last-minute-rrsp-buyers-i-am-guilty/#comment-37 Hi John, I have heard the argument before about using your tax refund to pay down your mortgage. And it is valid. Here are my points: 1. I personally think there is too much propoganda from the financial industry to get people saving for their retirements. For the financial industry, it is a win-win. Not only do they earn commissions and fees from my investments, they also earn interest from my mortgage! My theory is: pay down your debt first. If you can be debt free by 40, you have plenty of time to save for your retirement. Check out my article <a href="http://www.diyfinances.com/2006/02/25/moneytalk-on-robtv-to-rsp-or-not-rsp/">"To RSP or Not RSP."</a> 2. The rate of return you earn in your RRSP is an unknown. You can assume an 8% return, but that is it. However, I know what my mortgage rate is and I have to pay my mortgage with after tax dollars. So depending on your tax bracket, this is probably a pretty healthy return. And it is a guaranteed return. Going forward, I have heard many economists and gurus predict that equity markets will be earning 6-8% per year. I believe that either way is effective. It comes down to personal choice. Hi John,

I have heard the argument before about using your tax refund to pay down your mortgage. And it is valid.

Here are my points:

1. I personally think there is too much propoganda from the financial industry to get people saving for their retirements. For the financial industry, it is a win-win. Not only do they earn commissions and fees from my investments, they also earn interest from my mortgage! My theory is: pay down your debt first. If you can be debt free by 40, you have plenty of time to save for your retirement. Check out my article “To RSP or Not RSP.”

2. The rate of return you earn in your RRSP is an unknown. You can assume an 8% return, but that is it. However, I know what my mortgage rate is and I have to pay my mortgage with after tax dollars. So depending on your tax bracket, this is probably a pretty healthy return. And it is a guaranteed return.

Going forward, I have heard many economists and gurus predict that equity markets will be earning 6-8% per year.

I believe that either way is effective. It comes down to personal choice.

]]> By: John http://www.diyfinances.com/2006/02/27/last-minute-rrsp-buyers-i-am-guilty/#comment-36 John Tue, 07 Mar 2006 20:15:42 +0000 http://www.diyfinances.com/2006/02/27/last-minute-rrsp-buyers-i-am-guilty/#comment-36 Hey! I commend you on trying to pay down your mortgage as fast as possible. This however, is not always the most effective use of your money. Check out my post for something to think about. <a href="http://www.writingup.com/johnsunshine/mortgage_or_rrsp_contribution" rel="nofollow">Mortgage Or RRSP Contribution</a> Hey! I commend you on trying to pay down your mortgage as fast as possible. This however, is not always the most effective use of your money. Check out my post for something to think about.

Mortgage Or RRSP Contribution

]]> By: 0xCC http://www.diyfinances.com/2006/02/27/last-minute-rrsp-buyers-i-am-guilty/#comment-26 0xCC Wed, 01 Mar 2006 13:05:50 +0000 http://www.diyfinances.com/2006/02/27/last-minute-rrsp-buyers-i-am-guilty/#comment-26 You are correct, you just get back your marginal tax rate (I looked into this a little more this morning because I didn't quite get it either). However, you could have over-paid your taxes over the year or made donations or whatever and a package like QuickTax (through the RRSP Wizard) will tell you exactly how much you can contribute to your RSP so that your total return (not just the part from contributing to the RSP) will cover exactly your contribution. You are correct, you just get back your marginal tax rate (I looked into this a little more this morning because I didn’t quite get it either). However, you could have over-paid your taxes over the year or made donations or whatever and a package like QuickTax (through the RRSP Wizard) will tell you exactly how much you can contribute to your RSP so that your total return (not just the part from contributing to the RSP) will cover exactly your contribution.

]]> By: Average_Joe http://www.diyfinances.com/2006/02/27/last-minute-rrsp-buyers-i-am-guilty/#comment-24 Average_Joe Wed, 01 Mar 2006 01:51:23 +0000 http://www.diyfinances.com/2006/02/27/last-minute-rrsp-buyers-i-am-guilty/#comment-24 Hmmm. My wife uses QuickTax to do our tax returns. I am not sure I understand your statement "how much you can contribute so that you get the exact same amount back in your refund." Are you saying that there is a certain amount, let's say $1,000, that if I put that amount in, I get that whole amount back out? My understanding is that for every $1,000 I put into my RRSP, I basically get my marginal tax rate back. So if I was in a 36% tax bracket, I would get $360 back as a refund. Hmmm. My wife uses QuickTax to do our tax returns.

I am not sure I understand your statement “how much you can contribute so that you get the exact same amount back in your refund.”

Are you saying that there is a certain amount, let’s say $1,000, that if I put that amount in, I get that whole amount back out?

My understanding is that for every $1,000 I put into my RRSP, I basically get my marginal tax rate back. So if I was in a 36% tax bracket, I would get $360 back as a refund.

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