I have the following situation:
- I have a balance of 10K in my Line of Credit for which I pay minimum every month.
-I plan on taking a RRSP catchup loan with my bank for 20K for say 5 years.(assuming I have enough room in my RRSP).
-Out of my tax refund, I pay off my Line of Credit.
-I invest the RRSP rather convservatively to ensure that the value does'nt change significantly.
Does this plan make sense to you guys? My idea is to eliminate the debt and have some investments going. What are the precautions I need to take? What kind of investments I should be looking for investing the loan amount?
Any suggestions/thoughts would be greately appreciated.
Thanks
Timon
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"The grass is not, in fact, always greener on the other side of the fence. Fences have nothing to do with it. The grass is greenest where it is watered. When crossing over fences, carry water with you and tend the grass wherever you may be"
Quote:
Originally posted by Timon
I have the following situation:
- I have a balance of 10K in my Line of Credit for which I pay minimum every month.
-I plan on taking a RRSP catchup loan with my bank for 20K for say 5 years.(assuming I have enough room in my RRSP).
-Out of my tax refund, I pay off my Line of Credit.
-I invest the RRSP rather conservatively to ensure that the value doesnt change significantly.
Does this plan make sense to you guys? My idea is to eliminate the debt and have some investments going. What are the precautions I need to take? What kind of investments I should be looking for investing the loan amount?
Any suggestions/thoughts would be greatly appreciated.
Thanks
Timon
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
Thanks Pramodji for your responses.
The only investment that I see I make out of RRSP would be conservative, given that I need to have the investment to offset the catchup loan eventhough my general risk tolerance and the time horizon is high.The maximum return I could expect out of a conservative portfolio would be in the range of 4-6% which is almost the prime(the interest I will be paying for the loan).
Does it make sense to go with this plan in this case if my investments are probably earning less than prime? I still need to figure out how the fact that I will be paying off my LOC make an impact.
I am sure this analysis would be helpful to others as well.
Thanks for your time once again and waiting for your response.
T
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"The grass is not, in fact, always greener on the other side of the fence. Fences have nothing to do with it. The grass is greenest where it is watered. When crossing over fences, carry water with you and tend the grass wherever you may be"
Hi,
There are secured investments out in the market where one may expect getting over 12% with interest earned working like RRSP and investment is taxed at maturity/withdrawal like capital gain.
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dp_jain
This scenario make sense if I could get a return of 12%( I am assuming that this is without condering the tax refund).
What are the products that you suggest?
Thanks once again
T
-----------------------------------------------------------------
"The grass is not, in fact, always greener on the other side of the fence. Fences have nothing to do with it. The grass is greenest where it is watered. When crossing over fences, carry water with you and tend the grass wherever you may be"
Quote:
Originally posted by dp_jain
Hi,
There are secured investments out in the market where one may expect getting over 12% with interest earned working like RRSP and investment is taxed at maturity/withdrawal like capital gain.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
Quote:I would like to know, too.
Originally posted by dp_jain
There are secured investments out in the market where one may expect getting over 12% with interest earned working like RRSP and investment is taxed at maturity/withdrawal like capital gain.
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