Jan 22, 2019

How a loan can put you on top during RRSP season:


The RRSP contribution deadline is just around the corner. Make your way in to see us by March 1st if you want your contribution to count for the 2018 tax year.

 

Often times, you may not have the money to spare after the holidays to drop into your RRSP, even though the benefits of a sweet tax return are calling your name. Or maybe you can spare a small amount to deposit, but aren’t maximizing the yearly contribution you can make.

The good news: It’s never too late to start or enhance your retirement savings plan. An RRSP loan is a great way for you to maximize your contributions and come out on top during tax season. This year, we have TWO different ways to maximize your long term investments by borrowing short term.

 

How it works.
Essentially, you’re borrowing money so that you can put more into your RRSP. This allows you to receive a higher tax deduction, which means you’ll get a larger refund or reduce the amount of tax you might owe. Whether you would like to borrow for the current tax year, or you have available contribution room from years passed, we can help you to develop a success plan! It’s like buying a seedling, then having the benefit of its sweet fruits for many years to come!


Make your money work as hard as you do.
An RRSP loan could help you maximize your contribution and put you on track for your ideal financial future. If you haven’t been able to contribute in the past, or you’ve just started to plan for your retirement, it might be a good solution. You can make your savings work for you now and grow your savings faster – it’s a win-win.

For example, if you take out a loan for $1,000 and pay it off in 12 equal installments, you’d come out with a $415* bonus. That is, once you’ve factored in the interest owed, interest earned, and the tax return. That’s $415 you wouldn’t have made if you had contributed nothing.

*The above example assumes a loan rate of 4.50% repaid in 12 equal installments, interest calculated monthly on a declining balance, a marginal tax rate of 40% and a 4% investment rate of return. 

 

It’s easy to set up.
Seriously, it’s simple! All you need to do is call in and book an appointment.

 

Take advantage of unused contribution room from past years.
A lot of people know that there’s a maximum amount that can be contributed each year. But did you know that you can ‘top up’ unused contributions from the past? The beauty of an RRSP is that your contribution allowance never expires. So even if you didn’t contribute for 15 years, the contribution amount from each of those years is still available. With Horizon’s RRSP Catch-Up Loan, you can make up for your lost time. With flexible repayment plans ranging from 1-10 years, you have the ability to pay at your own pace.

 

Is this for me?
If you are straddling the line in between two tax brackets and want to ensure that you aren’t paying a higher percentage in taxes - This is for you.
If you want to invest in your future, but don’t have a lump-sum to invest – This is for you.
If you missed out on contributing in the past, and want to catch up – This is for you.
If you want to reach your goals for a comfortable retirement – This is for you!

 

Need advice? Let’s chat.
Come in and meet with one of our investment specialists ahead of the RRSP deadline. They’ll review your retirement goals and investment portfolio to make sure you’re making the right contributions to ensure you are on the path towards a comfortable retirement.