Quote:
Originally Posted by Red
Sylvanfan, to get a 40% return you need to earn more than 73K. People in that tax bracket should have no problem buying RRSPs for cash.
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Yeah, but what if you didn't start making that type of money until just recently or you have big carry overs from previous years. I know I wasn't able to contribute much for a couple of years after my fiance was laid off, than getting married and having to send her to school. Yeah, I can afford to put away my revenue Canada maximum monthly allotment, but I also have 6 months from earlier this year where I was playing catch up.
So in order for me to get my 18k max for this tax year I have to put away $3000 a month starting now, than I'd have to go down to $1500 a month in March and go forward. So the best way for me to get the maximum tax benefit is to look at a time frame of 18 months and two tax years to save 36k, and half of it has to come in the next 6 months. So for me it makes sense to put my $1500 a month into long term savings and use the extra $500 to borrow the diffence and pay it back over that time frame. In the end I'll pay like $400 in interest and I'm pretty sure that 9000 extra in my RRSP will bring me back more than $400.
My biggest regret in the past 10 years is that I was waaaaay too conservative with my money. I had a buddy who made less than me, and spent much more cavalier than I do. But he got into buying second properties and that type of thing, basically using borrowed money to try and earn extra money. Well 7 years later guess which one of us has a net worth 200k higher than the other guy. It's not me.