Did you maximize your RRSP every year? year, every, Did, RRSP, maximize

PreciousMoment

It's a lot of $$

WaruiOne

I think it is worth it to do so! You get to save on your taxes! You can also do tax-deferred investments, which in the long-term, would give much more returns if you manage the money well.

If you do not have enough money, you can also borrow money for RRSP as well, a lot of people do that too.

lerico

Depends.

1) If you cannot take risk in investment, and only plan to put your RRSP as GIC (<-- many people do that even young people), the interest you earn in your RRSP might not cover the cost of borrowing.

2) If you have a stable job, have planned to stay in that position for a long time, and know that you can stay in that position for a long time (i.e. unionized job) AND that job has a penion. (i.e. you are working in a huge unionized organization, for example, government, educational institution). You might have to re-think when you make contribution to RRSP. It is because at the time your are re-tired, your income (penion + RRSP) might put you in a high tax bracket, and since you are in a high tax bracket, you might loss many government elder benefits.

3) Get yourself a home first. If you don't currently own a real estate, you might want to consider instead of putting money in RRSP, you those money into your first apartment or house. First, put $20000 in RRSP, and then take it out using the first home buyer plan. You will have to repay those 15% each year i believe. Use those money for the down payment and get an apartment or house.  That way, you can enjoy the GST saving for your first and primary home. You will be owning a house, which is a good long term investment without a doubt. When you start earning more money, replace your current real estate with bigger, better one. Only contribute to RRSP when you have extra cash.

Of coz, this is only my personal opinion. Every person has their own belief and lifestyle.

eeq20

I think you should check your tax bracket first, for 2007 , the federal tax rate is
15% on the first $37,178 of taxable income, +
22% on the next $37,179 of taxable income (on the portion of taxable income between $37,178 and $74,357), +
26% on the next $46,530 of taxable income (on the portion of taxable income between $74,357 and $120,887), +
29% of taxable income over $120,887.

so say if you make $40,000 this year, it would be wise to put at least  $2822 into RRSP, so you can be tax in the lower income bracket for that portion of income.

Personally I would not borrow money to put into RRSP, and if in the future you might consider moving back to HK and become a non-resident, you will need to close down the RRSP account, and if you have a large sum in there, it could be a stiffly tax on it.

yungfourfour

RRSP serves to give you tax break and retirement spending... I'd say "Maximize within limits", I won't suggest borrowing for it.

Assuming you contribute $2000 a year startint when you graduate (say 21 years old), 10% net annual return, and you stop contributing when you turn 28.  you'd get $664,000 at age 65

Assuming you start at 28 and you contribute until 65 (35 years), same rate of net return, at the age of 65 you'd only get $660,000.  SO START AS EARLY AS POSSIBLE.

and remember, when you withdrawl RRSP for first time home-buyer plan, the maximum is only $20000.  NEITHER YOU or your spouse can contribute to RRSP that year, and you have to repay it back to your account within 16 years (that repayment amount has no tax break... that considered as repayment. )If you miss a payment, the government treats that money as if you withdrawn it directly from RRSP and you have to pay tax on it too.  Big drawback in my opinion

pkphilip

Also depends on how much you are getting in return for RRSP, I only invest in RRSP if it can give me more than 7% in return (stock/mutual funds). Othewise, the money deflates due to inflation.

Philip

yungfourfour

Oooh and 1 more thing
If your company do RRSP match, make good use of it.

say you are making $50K a year and they give you 5% match, you get $2500 from the company when you contribute $2500, That's $5000 in your retirement account a year

快樂牛郎

原帖由 yungfourfour 於 2007/12/20 22:24 發表
NEITHER YOU or your spouse can contribute to RRSP that year

This is not true.