The Last-Minute Guide to Your RSP

The countdown has begun toward this year’s RSP deadline, and there are a couple of things you can still do to score before the game ends. Consider this: Invest $10,000 cash to an RSP and the government could give you $3,000+ in the form of a tax deduction. That deduction filters right to the bottom line of your tax return. Not bad considering you’ll still have your $10,000 RSP.

Don’t have $10,000 cash sitting around? Consider an RSP loan. First, borrow $10,000 to dump into your RSP. Then take the $3,000+ tax deduction you just created and pay off nearly a third of the loan. With less than $7,000 to pay back, your monthly payment at 6% would be $600/month for one year or $310/month for two years.

Keep in mind that we aren’t gambling away borrowed money here. We’re investing what we plan on paying back in the short term. The interest is a small price (a total of $230 for a 1-year term and $450 for a 2-year term) to pay considering the government just gave you $3,000+ back. After a year or two, you’ve paid the loan, and you have your RSP valued at $10,000 plus growth.

With the market depressed, logic says it’s a good time to buy. Alternately, consider investing in land or mortgages for double-digit returns that don’t bow to market fluctuations.

Photo courtesy of Karney Li

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