Calgarypuck Forums - The Unofficial Calgary Flames Fan Community - View Single Post - Cash sitting in the bank -- invest it or pay down the mortgage?

tvp2003 · 02-26-2008, 09:52 AM

Thanks for the info folks. After years of school and paying out debts and student loans, I agree it's a good position to be in -- if we had bought our house a year earlier we'd probably be laughing. On the whole, we are good savers but pretty green when it comes to investing. Some of this stuff is already getting over my head, but I guess that's why there are professionals out there that handle this kind of thing

MoneyGuy: After employment income, my tax rate on any investment income would be 36% (26% federal plus 10% provincial). This year, I'd be looking at somewhere around $10-20K to play with; my mortgage lets me pay off up to 20% per year without penalty (on a $280K mortgage); I guess that's an important detail!

EDIT: I just remembered that my wife is the one buying the investments, because she gets taxed at a lower rate (I think she's right on the border between 15 and 22% federal tax).

A couple of you have mentioned paying down the mortgage and then borrowing it back to invest and writing off the interest -- I'm assuming this would require a separate tax vehicle of some sort. Plus, if it involves a HELOC, I don't think we have enough equity to qualify for that yet (I think you need 25%). In any event, I'm not sure if we want to leverage ourselves too much right now -- maybe in a few years when I'm a little more established in my work and things are little more stable (which will allow us to think longer term for an investing strategy).

Also, the money in our RRSP is staying there -- I'm not sure if that's what you meant Prairieboy, but we're not planning on withdrawing those funds in 5 years, just the non-registered investments (assuming the markets were still good and the math made sense).

02-26-2008, 09:52 AM	#23
tvp2003 Franchise Player Join Date: Mar 2006 Exp:	Thanks for the info folks. After years of school and paying out debts and student loans, I agree it's a good position to be in -- if we had bought our house a year earlier we'd probably be laughing. On the whole, we are good savers but pretty green when it comes to investing. Some of this stuff is already getting over my head, but I guess that's why there are professionals out there that handle this kind of thing MoneyGuy: After employment income, my tax rate on any investment income would be 36% (26% federal plus 10% provincial). This year, I'd be looking at somewhere around $10-20K to play with; my mortgage lets me pay off up to 20% per year without penalty (on a $280K mortgage); I guess that's an important detail! EDIT: I just remembered that my wife is the one buying the investments, because she gets taxed at a lower rate (I think she's right on the border between 15 and 22% federal tax). A couple of you have mentioned paying down the mortgage and then borrowing it back to invest and writing off the interest -- I'm assuming this would require a separate tax vehicle of some sort. Plus, if it involves a HELOC, I don't think we have enough equity to qualify for that yet (I think you need 25%). In any event, I'm not sure if we want to leverage ourselves too much right now -- maybe in a few years when I'm a little more established in my work and things are little more stable (which will allow us to think longer term for an investing strategy). Also, the money in our RRSP is staying there -- I'm not sure if that's what you meant Prairieboy, but we're not planning on withdrawing those funds in 5 years, just the non-registered investments (assuming the markets were still good and the math made sense). Last edited by tvp2003; 02-26-2008 at 04:38 PM.