Trusted Regina’s Financial experts share their tip on Do not do RRSP's:
What are your other choices?
RRSPs are not always the right thing to do. Sure they have benefits, you can Google RRSP’s and find 1000’s of articles on why you should be using them, but what are your other options?
Everyone’s situation is different for an unbiased perspective on your unique situation look up at fee-only financial planner. Hint hint that’s what we do
I am going to make some broad statements here that will have exceptions but generally this is the case. If you are in debt, young, lower income, have TFSA room, have maxed out your RRSPs, or are self employed then RRSPs are should not be your first choice in your grand plan of financial action.
So what are your other options?
Pay down your mortgage…yuck, I know but it has some merit. Mainly you reduce future interest payments and take one step closer to protecting your home. As your home increases in value the gain is tax sheltered so long-term the bang for your buck is quite good. The tax-free nature of it is the equivalent of tax-free growth provided in an RRSP or TFSA.
In times of unstable stock markets, “investing” in your home is a great, more conservative option for investors. And FYI, if you’ve had a rough year and cannot contribute to your RRSP, don’t worry, you’ve been investing in your home all year.
Other investments: TFSA’s can be rolled into an RRSP later for the same deduction. So if you are not sure if you will need to funds later or your taxable income is very low you can park it in your TFSA and get the deduction later. Other investment options are non-registered accounts in which returns are taxed by CRA.
Although we already mentioned paying off your mortgage, you may have other debt that should be attended to first. You’ve heard it before and you’ll hear it again…get rid of that credit card debt.
Do Nothing…
- If you’re a public servant with a government pension you are pretty set up
- If you have an big fat company pension you do not need an RRSP
- Old Auntie Phillis leaving you $1,000,000 in inheritance? You do not need an RRSP.
- OVERWORKED? Need a vacation? Take one. Do not let yourself get burnt out or injured and damage your future earning potential
Trusted Regina’s Finance Experts -give them a call to see how they can work for you!