Did you maximize your RRSP every year? year, every, Did, RRSP, maximize

PreciousMoment

It's a lot of $$

asmok

As  eeq20 says, you should check your tax bracket before you contribute to your RRSP. Maximizing does not necessary give you the best return on the long run as you'll need to take it out later in life.  If you are a person that likes to flip stocks, then maximizing it will give you a good place to play the stock market without paying taxes on your gains.

Borrowing to buy RRSP is a gamble on how the stock market will do for the year. If you are lucky, then the stock market goes up enough (at least 6-7%) then you make some money; if not you'll lose money.

快樂牛郎

原帖由 yungfourfour 於 2007/12/21 07:54 發表
you tried that before ?
or you repaid everything that year??

I found that from reference.

You le?

did you mean you cannot repay within the same year?
if so, then I misunderstood you.

yungfourfour

you tried that before ?
or you repaid everything that year??

I found that from reference.

You le?

快樂牛郎

原帖由 yungfourfour 於 2007/12/20 22:24 發表
NEITHER YOU or your spouse can contribute to RRSP that year

This is not true.

yungfourfour

Oooh and 1 more thing
If your company do RRSP match, make good use of it.

say you are making $50K a year and they give you 5% match, you get $2500 from the company when you contribute $2500, That's $5000 in your retirement account a year

pkphilip

Also depends on how much you are getting in return for RRSP, I only invest in RRSP if it can give me more than 7% in return (stock/mutual funds). Othewise, the money deflates due to inflation.

Philip

yungfourfour

RRSP serves to give you tax break and retirement spending... I'd say "Maximize within limits", I won't suggest borrowing for it.

Assuming you contribute $2000 a year startint when you graduate (say 21 years old), 10% net annual return, and you stop contributing when you turn 28.  you'd get $664,000 at age 65

Assuming you start at 28 and you contribute until 65 (35 years), same rate of net return, at the age of 65 you'd only get $660,000.  SO START AS EARLY AS POSSIBLE.

and remember, when you withdrawl RRSP for first time home-buyer plan, the maximum is only $20000.  NEITHER YOU or your spouse can contribute to RRSP that year, and you have to repay it back to your account within 16 years (that repayment amount has no tax break... that considered as repayment. )If you miss a payment, the government treats that money as if you withdrawn it directly from RRSP and you have to pay tax on it too.  Big drawback in my opinion

eeq20

I think you should check your tax bracket first, for 2007 , the federal tax rate is
15% on the first $37,178 of taxable income, +
22% on the next $37,179 of taxable income (on the portion of taxable income between $37,178 and $74,357), +
26% on the next $46,530 of taxable income (on the portion of taxable income between $74,357 and $120,887), +
29% of taxable income over $120,887.

so say if you make $40,000 this year, it would be wise to put at least  $2822 into RRSP, so you can be tax in the lower income bracket for that portion of income.

Personally I would not borrow money to put into RRSP, and if in the future you might consider moving back to HK and become a non-resident, you will need to close down the RRSP account, and if you have a large sum in there, it could be a stiffly tax on it.