RRSP Loans: Less Tax, Better Retirement

Have you ever considered borrowing money in order to increase your contribution to your Registered Retirement Savings Plan (RRSP)?

Unlike credit card debt, RRSP loans are considered "good debt". Investment loans and mortgages fall into that "good debt" category because they help you increase your net worth. By taking out an RRSP loan you can invest right away and take advantage of long-term compounding growth, as well as immediate tax refund. The tax refund that you receive from your RRSP contribution is often more than the interest that you'll pay on the loan.

Here's how it works:

John is 40 years old, with an income of $55,000. He takes an RRSP loan to be paid off in one year.

At 4% interest rate, John would have only paid approximately $150 of interest on the loan. For a total cost of approximately $7035 ($6885 plus $150), John invested $10,000 into his RRSP. However he used a Retirement Planning Specialist that had access to all 34 companies in Canada. He saved tons of time and received a better rate of return.

Fast forward 25 years to age 65. Assuming historic average annual return of 12%, that $10,000 contribution that cost $7035 is now worth $170,000.64.

Advisor & Co has partnered with BMO and B2B Bank to provide you with RRSP loans at competitive rates. Talk to one of our team members today and learn how and Advisor & Co RRSP can be incorporated into your personalized financial plan.

Contact one of our team members today. Click Here