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This image expresses the math, the extent of money, and maybe the unexpected dues of paying a mortgage. I like this image because it illustrates how costly a mortgage can be, and how you should always calculate this finance.

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This video on 'Current Mortgage Rates' reveals information based in Canada in February. the video reveals variable rates at discounted and non-discounted prices. It includes information with different percentages and time frames. Information on insured rates. It gives insights on what is more risky for the bank. It gives tips for when searching for mortgages to look right up until purchase for the best drop in rates.

I selected this video due to the relevance and most updated information. One piece of information I found to be useful was the comparison between the previous month and insight on which rate was the most flexible.

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Current Mortgage Rates Canada - February 2021 Mortgage Update

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This video of which is the 'Best Bank In Canada to Get a Mortgage' reveals to find a bank that has the least cost over life of said mortgage ratio. Additionally, the one with the most flexibility. The video reveals in order of least to best which bank you should choose. This video is also the first part of a 3 part series, where the second video goes through non-bank options and the third video compares mortgages of banks to non-banks.

I choose this video with the same creator as my first video choice because he gives very practical information in a brief enough time frame, while still being engaging. What I found to be useful aside from the mortgage was the video mentions which bank has key attributes in their own way.

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Best Bank In Canada To Get A Mortgage | Part 1

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This video on '5 Tips to Safely Secure your RRSP to a Property' was great at explaining if you are looking to invest your RRSP into a home this is how you should do it. The video reveals an example of one person paying a property outright because their investor withdrew. This was done safely because the loan to value was less than 80%. One of the tips were to know the experience of the borrower.

I choose this video because it was still within the topic, but used differently by the perspective that someone has already saved a great deal into their RRSP. This video was effective because it illustrated numbers in the example, showing that the ratio of loan to value.

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RRSP Mortgages: 5 ways to Safely Secure Your RRSP savings to a Property.

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1.) I learned that this topic does not necessary have one hard answer. That instead it depends on what stage you are in life and where you want your money to go.

2.) This topic is interesting for me because when my parents were still together they never spoke about mortgages, they had lived in this home for 33+ years. When my dad moved out he never really spoke on his finances until I became interested in them. I have also taken an interest in investing and learning about property, regarding what goals I will set to move out.

3.) The most important thing I would pass on to either my friends or younger brother would be that making sure your retirement is secured is very important. To do thorough research on what is appropriate to each of them, not missing any factors. And to begin with taking advantage of a mortgage and RRSP calculator.

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This image expresses a childhood-like nostalgia of how you should start saving as young as possible. To mimic how you saved for sweets when you were a kid, with any loose change or extra cash, it should be put away in a savings account; or piggy bank.

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This website on 'Your RRSP vs. Mortgage Calculator' reveals which strategy of investing is right for you. It is also a useful website for other tools in the task bar for finding other calculators, information on insurance, financing, the list goes on. It is also helpful in the sense that it is easy to use for first time users.

I choose this website as a tool to give a comparison between the debate of paying off a mortgage or investing your money into your RRSP.  This website would be an asset to anyone looking for an online quick calculator. This website is different from others because it factors your current money to invest.

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The power of RRSPs

The best strategy for you

Get RRSP advice

Learn more about how you can take advantage of the benefits of RRSPs to save for your retirement.

Registered retirement savings plan (RRSP)

Other helpful RRSP calculators to try:

RRSP calculator

RRSP loan calculator

Make an RRSP a key part of your retirement plan. Talk to your advisor about building an RRSP that fits your needs.

Speak with an advisor today

The power of RRSPs

Learn more about how you can take advantage of the benefits of RRSPs to save for your retirement.

Registered retirement savings plan (RRSP)

The best strategy for you

Other helpful RRSP calculators to consider:

RRSP calculator

RRSP loan calculator

Get RRSP advice

Make a RRSP a key part of your retirement plan. Talk to your advisor about building an RRSP that fits your needs.

Speak with an advisor today

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The power of RRSPs The best strategy for you Get RRSP advice Learn more about how you can take advantage of the benefits of RRSPs to save for your retirement. Registered retirement savings plan (RRSP) Other helpful RRSP calculators to try: RRSP calculator RRSP loan calculator Make an RRSP a key part of your retirement plan.

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Welcome to my padlet on Investing in RRSP vs. Mortgage. You can expect to see different insights on which factors weigh in for either topic. It is also noted that with looking at the pros and cons, these resources illustrate that it depends on many factors in ones life to decide which is meant to invest in first.

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This website on 'Should You Pay Down Your Mortgage or Contribute To Your RRSP' reveals the possibility of either option and weighs out the more ideal circumstances. It also reveals the pros with regards to age and investing in your RRSP. Furthermore, this website explains a personal financial index and how to withdraw from an RRSP without any penalty.

I choose this website because I have a bias with Desjardin Insurance, that I have my car insurance with them. I think this website has an edge over other websites because it gives tips on how to pay off your mortgage quicker.

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In a perfect world, paying off your mortgage before contributing to your RRSP would be a good thing to do. But that would call for extreme discipline.

After your last mortgage payment, you would have to keep putting the same monthly amount aside for your retirement. That's not very realistic.

Another possibility is to make substantial contributions to your RRSP before buying a home. However, a home is more than a financial investment; it's a life choice that you don't want to put off for too long. The RRSP that you started early could help make you a homeowner more quickly through the Home Buyers' Plan. Find out how to withdraw from your RRSP without penalty to buy a property.

That's why it's usually best to find a balance between paying your mortgage and contributing to your RRSP, even when RRSP returns are lower than mortgage interest rates.

Why? Because the capital invested in your RRSP will produce compound interest in a tax shelter. In the long run, you'll have a substantial nest egg for your retirement. Furthermore, for those who have nothing to fall back on in the event of illness or unemployment, an RRSP can be used as an emergency fund.

Whether to pay down your mortgage and contribute to an RRSP also depends on your age. If you're not retiring for a while, the compound interest in a tax shelter of the RRSP is more advantageous than a paid off mortgage. If your retirement is around the corner, pay your mortgage more quickly to reduce your budget for the next few years.

Also to be considered, if you are taxed at a high rate, RRSP contributions might be more advantageous than mortgage payments because of the associated tax savings.

To pay off your mortgage more quickly, follow these tips:

Make your payments weekly instead of monthly.

If possible, select a short term. The interest rate is usually lower than for long terms.

Opt for the variable rate, the lowest on the market, and by making higher payments, you'll pay off your mortgage more quickly.

Each year, use the tax return you get from your RRSP contribution to pay down your mortgage.

If you want to contribute to your RRSP but can't seem to pay off all your credit cards, you need to review your financial plan. Start by listing your priorities.

Tools and tips

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Should you pay down your mortgage or contribute to your RRSP? | Desjardins

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In a perfect world, paying off your mortgage before contributing to your RRSP would be a good thing to do. But that would call for extreme discipline. After your last mortgage payment, you would have to keep putting the same monthly amount aside for your retirement. That's not very realistic.

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This video on 'Is it Better to Pay Off a Mortgage Early or Invest' reveals that it depends on your retirement goals, and current financial situation. The video points out that your home is your asset, and your investment should be diverse. To sit down with a financial planner or advisor. This video values investing in your retirement. The video warns on the tax implication of using your RRSP to pay off a mortgage.

I choose this video because of the Q&A aspect, I found the video was knowledgeable. What this video illustrated that the others did not, was the gravity of withdrawing your retirement savings to pay off your mortgage and how it would lose value and especially because it would be considered income. Meaning it would add on to become income tax.

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Is it better to pay off mortgage early or invest? (the answer may surprise you!)

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This website to 'Invest in an RRSP, TFSA, or Pay off a Mortgage' reveals in-depth information on advantages and disadvantages of each topic with numbered lists. With an insight on what's the best option. Conclusively, an RRSP would have the most amount of disadvantages. This is contributed by the factor of age and position in life. As this is a newer publication the end of the page gives a contact to get your own personalized financial plan by the writer.

I choose this website because it was very informative of each pro and con. A piece of information that was different was that you have to look at the whole financial picture rather than one aspect.

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At Catalyst, we have an entire division dedicated to your wealth planning needs. It's a new year and finances are on most people's mind again. The Registered Retirement Savings Plan (RRSP) contribution deadline is March 1st, and $6000 of new contribution room has been added to Tax Free Saving Accounts (TFSA). Before investing, it is good to get a refresher on what considerations should be taken into account when using each saving vehicle. It will help to better understand what is best for a specific situation and financial goals.

We asked our own internal financial planning expert Simon Wong for some investment advice when it comes to Registered Retirement Savings Plans (RRSPs), Tax Free Savings Accounts (TFSAs) and Mortgages. Here what he had to say:

"Most people understand that it is essential to save for the future. However, with the myriad of choices, it is often confusing where to start. The most frequently asked question as a financial planner I get asked is should I invest in RRSPs, TFSAs or pay down my mortgage (I would consider paying down your mortgage as a form of saving.)

The primary goal of putting money into your RRSPs or TFSAs is to increase your net worth. Paying off your mortgage accomplishes the same objective by decreasing your liabilities-the confusion of what choice to pick arises because each saving vehicle has its advantages and disadvantages. Let's take a look at these before discussing which option is the best.

Registered Retirement Savings Plan (RRSP)
Advantages:
1. Contributions are tax-deductible, which means a potential tax refund. It is possible to redeploy this tax refund into additional savings such as RRSP, TFSA or even pay down debt. The higher your current marginal tax rate, the more savings in taxes you will have.
2. There are no taxes on investment earnings as long as they stay in the RRSP, meaning tax-free compounding leading to faster growth of money.
3. There is potential for income splitting in retirement with spousal RRSPs.
4. Can be withdrawn tax-free with First Time Home Buyers Plan to purchase your first home.
5. Can be withdrawn tax-free with Lifelong Learning to fund education as an adult
6. Protected from creditors

Disadvantages
1. Withdrawals are considered ordinary income and are subject to a withholding tax.
2. Withdrawals can potentially impact income-tested benefits, such as Old Age Security(OAS) and Guaranteed Income Supplement(GIS).
3. Contribution room is limited based on the earned income you make. If you have a lower earned income or get paid mostly in dividends, this could mean you have minimal contribution room to invest in RRSP.
4. If you withdraw from an RRSP, that contribution room is gone, unlike a TFSA, which you will get back the following year. With the loss of contribution room and withdraws being taxable, RRSPs are very inflexible.
5. Mandatory withdrawal age at the end of the year you turn 71. You will have to a forced annual minimum withdraw that will increase each year on a percentage basis.
6. Non-CPP pension contributions will reduce the RRSP room available.

Tax Free Saving Account (TFSA)
Advantages
1. Similar to an RRSP, the investment earnings inside a TFSA are not taxed. Again, the TFSA will have tax-free compounding like an RRSP.
2. All withdraws from a TFSA are tax-free, unlike an RRSP. You will never have to pay taxes on any investment income earned inside a TFSA.
3. If you make a withdrawal from a TFSA, you will get that contribution room back the next calendar year on Jan 1.
4. New contribution room is the same for everyone regardless of income.
5. No mandatory withdrawal when a specific age is reached like an RRSP
6. Withdraws will not affect government benefits like OAS or GIS.
7. You can share contributions with a spouse since TFSA contributions are made with after-tax money, there is no attribution of earned income back to the contributing spouse.

Disadvantages
1. There is no tax deduction for contributions into a TFSA, unlike an RRSP.
2. No Protection from creditors
3. Annual new TFSA contribution room is comparatively much smaller than new RRSP contribution.
4. Investment options are restrictive for TFSA compared to RRSPs

Paying off a Mortgage
Advantages
1. The interest rates on a mortgage are usually set for years, which means you know precisely the rate of return you get from paying down debt. The rate of return is also guaranteed; unlike an RRSP and TFSA, the market returns are not known.
2. There are many soft benefits of paying down debt, such as reducing emotional stress and not having the uncomfortable feeling of money owed.
3. After paying off a mortgage, there is an increase in discretionary cash flow for other uses such as investing or lifestyle needs.

Disadvantages
1. The interest rate on mortgages tends to be lower. The lower interest rate means that you can often get a better rate of return in the long run by investing in the market than by paying down debt.
2. Investing early in life allows an investment to compound for a more extended period and leads to larger nest eggs. Focusing solely on paying down debt often leads people to be house rich with very little for retirement. Having all your money in one asset class(your home) in one geographic location could be very risky for your retirement cash flow.

What's the best option?
Now that we have looked at the considerations that affect whether investing in RRSPs, TFSAs or paying down a mortgage is the best, let's chat about best practices.

Generally, it makes sense to invest excess income into an RRSP or TFSA before paying off a mortgage quicker. TFSA and RRSP Investments can grow tax-free, and returns can compound. There is no year-to-year tax impact from investing inside of either the RRSP or TFSA. If you invest in the markets, TFSAs and RRSPs tend to get a better return rate than paying down a mortgage. These reasons make it very attractive to invest inside both a TFSA and RRSP over paying off a mortgage.
However, this is not always the case.

RRSPs can be very disadvantageous at certain income levels and in different situations. If an individual expects to have a very high taxable income in retirement, an extensive RRSP portfolio could lead to an OAS clawback, and they might end up paying more taxes than you save investing in RRSPs. In that case, it makes much more sense to pay off the mortgage early than to maximize their RRSP contributions.
TFSAs can also be very dangerous if an individual is terrible with money. The flexibility in the TFSA and lack of consequences of withdraws can make it very easy to spend investment earnings. It may be difficult for some people to keep the money inside the TFSA and save for the long term. In that case, paying down a mortgage is a better choice as it is not as easy to take out equity from a home.

These are only a couple of examples of when it is more beneficial to pay off a mortgage vs investing in a TFSA or RRSP. Deciding which choice is best for you is not just about taxes and rates of return. Each person's situation is going to be different. When making a large financial decision, it is essential to look at the whole financial picture and not just one aspect. Choosing between investing in a TFSA, RRSP or paying down your mortgage may seem like a simple decision, but there's a lot to consider.

The sooner you take action to make the right decision for yourself, the larger the impact on your financial future. It is essential to get a customized financial plan and talk to a professional financial planner to determine the best path when deciding whether to invest in RRSPs, TFSAs or paying down your mortgage.

Simon Wong MBA, CFP, CLU, FCSI. CIM, PFP, FMA, B.Comm
If you have questions or would like to get a customized financial plan. Simon can be contacted at (403) 968-1125 or inquire@thecatalystgroup.ca

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Invest in an RRSP, TFSA or Pay off a Mortgage? | The Catalyst Group

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At Catalyst, we have an entire division dedicated to your wealth planning needs. It's a new year and finances are on most people's mind again. The Registered Retirement Savings Plan (RRSP) contribution deadline is March 1st, and $6000 of new contribution room has been added to Tax Free Saving Accounts (TFSA).

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This website on 'Should You Pay an RRSP or Your Mortgage', although repetitive, reveals an alternative thoughts of factors. Such as interest rates, investment discipline, tax on withdrawal, etc. It states a comparison of what one person has done and how it affected their mortgage investment. This website also explains a deadline on investing so it can still be tax free in Canada, which was March 2nd.

I choose this website because I enjoy reading The Star, as my mom used to work there. A factor that this website included that others did not was inheritance, although unpredictable, if a possible outcome they advise paying off a mortgage first.

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February is RRSP season, and there is no shortage of advice available to Canadians on tax-free investing before the deadline of March 2.

One question which often arises at this time of year is whether homeowners should place available cash in an RRSP - or borrow the RRSP contribution - or use the money to pay down their mortgage.

My advice has always been that anyone who has a principal residence should not invest in an RRSP as long as there is a mortgage on the home.

Much of the advice available online and through financial institutions recommends investing as much as possible into the RRSP and using the tax refund to pay down the mortgage. But when advice comes from a source which is promoting RRSP investments, can it truly be unbiased?

In deciding which way to go, some of the factors include:

Interest rate: If the mortgage interest rate is higher than the return earned inside the RRSP, some advisers say it is better to pay down the mortgage.

If the return inside the RRSP is higher, other factors come into play. There may be a preference for paying down the mortgage if the interest rate is at least two percentage points higher than the investment returns in an RRSP.

Your age: The closer you get to retirement, the more important it becomes to have sufficient assets inside an RRSP to fund retirement. But building equity in a home is equally important to many homeowners.

If, for instance, a 25-year-old has no RRSP until her mortgage is paid off, then 15 years later at age 40 she can still make considerable RRSP contributions over the following 25 years before retirement. That's still lots of time to play catch-up.

Investment discipline: Once the mortgage is finally paid off, the amount of the former monthly payments should be regularly used to "catch up" on the RRSP. Will you have the discipline to do that? Or will the car dealer's showroom or travel agent's office beckon you?

Tax on withdrawal: All proceeds of an RRSP, or its conversion into a Registered Retirement Income Fund (RRIF), are taxable on withdrawal. This could put the taxpayer into a higher tax bracket on retirement.

Liquidity worries in future: An RRSP provides a ready source of funds in an emergency. But having a large equity in a home allows a homeowner to obtain an equity line of credit. The equity built up in the house is its own nest egg.

Retirement pension plan: A generous workplace pension plan that will provide a secure retirement offers the opportunity to concentrate on the mortgage more than the RRSP. Those with no pension plan are usually better off paying down the mortgage.

Inheritance: By the time many young people today reach retirement, they will have inherited the wealth of their parents or grandparents. If retirement looks secure for this reason, paying down the mortgage makes more sense while they are in their 20s and 30s.
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Correction: Due to a misplaced decimal point, the historical measurement of a U.S. foot was misstated in my last column. The correct definition is 1,200 metres divided by 3,937.

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Should you pay an RRSP or your mortgage?

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February is RRSP season, and there is no shortage of advice available to Canadians on tax-free investing before the deadline of March 2. One question which often arises at this time of year is whether homeowners should place available cash in an RRSP - or borrow the RRSP contribution - or use the money to pay down their mortgage.