Should you Borrow for RRSPs?

Compare the long term results of 4 alternatives:

  1. Borrow for RRSPs, and put the tax refund into your RRSP.  The interest on the loan is not tax deductible.
  2. Don't borrow for RRSPs, but use the loan payment calculated in #1 plus tax savings as a monthly deposit to RRSPs.
  3. Don't borrow for RRSPs, but use the loan payment calculated in #1 as a monthly deposit to RRSPs, and use the tax refund for living expenses.
  4. Borrow for RRSPs, but pay down the loan with the tax refund.

Input your information into the yellow fields, then click on the Calculate button.


Your marginal tax rate:  
Loan amount Loan is repaid over 1 year.
RRSP loan rate: Loan payment  
Estimated return on RRSPs  
 
  Years
Balance in RRSPs
Plan 1  
Plan 2  
Plan 3  
Plan 4  
 
Total deposits made to each RRSP:  
Plan 1  
Plan 2  
Plan 3  
Plan 4  
These amounts do not include the loan interest paid in Plans 1 and 4.

These calculators are for educational purposes only. You should not rely on the results as an indication of your financial needs and we recommend that you seek out your own legal, accounting, tax or professional advice. Any information is neither intended to be, or should be construed to be, investment or legal advice or an endorsement of any particular method of investing.