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No funds? No problem.
Get an RRSP Loan to max out your contributions this year
Making the maximum annual contribution to your Registered Retirement Savings Plan (RRSP) is one of the best ways to take advantage of compound interest and build a secure retirement. If you are a bit short of reaching your max RRSP contribution, an RRSP loan is a great way to supplement your contribution and grow your retirement fund.
Registered Retirement Savings Plan (RRSP)
A Registered Retirement Savings Plan (RRSP) is a retirement savings account registered with the government. Contributions to your RRSP are tax-deferred until you withdraw. The contribution amount is deducted from your gross income, potentially lowering the tax you pay on your income today.
- Taking out a loan to maximize your contributions towards an RRSP can be a great way to grow your retirement savings faster, as you’ll be contributing more money than you would otherwise have been able to. Additionally, the interest rates on loans used for this purpose can often be lower than other types of borrowing, so it can help you save money in the long run.
- Another advantage of taking out a loan for RRSP contributions is that it allows you to benefit from compounding interest and tax-free growth. By taking out a loan and contributing more to your RRSP, the money in your account will gain value faster (due to compounding) and any earnings made off your investments inside the RRSP are not taxed until you withdraw them. This means that any investments inside the RRSP will enjoy an even higher rate of return over time due to tax savings.
- Additionally, when it comes time for retirement, taking out a loan for contributions towards your RRSP means that when it comes time to withdraw funds from it, they will be taxed at a much lower rate than if they had been earned through other sources and withdrawn during the same year. This could result in significant tax savings, which could then be reinvested into other areas of retirement planning, such as paying down debt or investing in other areas, such as real estate or stocks.
Things to consider:
- What is your income tax rate?
If you're in a higher tax bracket and expect to be in a lower one later on in life, it could benefit you financially to invest today by taking out an RRSP loan. - Are you comfortable with some risk?
When taking out a loan, you still owe the principal and interest even if your investment takes an undesired dip in value. It's important to invest responsibly and plan ahead when dealing with borrowed funds!
Start your loan application today
The rates will default to posted rates in the application form, and may be adjusted after advisor review. If we have helped you with lending in the past, your information will conveniently auto-populate in the application form.
Note: you must be 19 years of age or older to apply.
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