Want to increase your RRSP contribution by 50% with no extra cost? Look in
 

In keeping with my thinking that webmasters working for themselves are at risk for not having a decent enough retirement strategy set up, I am passing along this bit of information. It was sent to me by my own tax & investment guy, and in my opinion it's a great little idea.

You can catch up on RRSP (Registered Retirement Savings Plan) contributions not made in previous years. It is relatively easy, through what's called a "Temporary Loan Strategy":

By example --

-- Bob can afford $1,000 savings and decides to get an RRSP.
-- He makes $48,000 so his combined marginal tax rate is 35.5% in Manitoba.
-- He borrows $536 to go with his $1,000 savings and makes an RRSP contribution of $1,536
-- No payments are due on the loan for 6 months. The rate is 7%.
-- He gets a refund on his income tax of $545 because of the RRSP.
-- He uses the refund to pay the loan off including $9 for 3 months interest.
-- He has now put $1,536 in his RRSP for only $1,000. His RRSP growth is 50% more than without the Temporary Loan.


I don't know if this will work in the US with your RIF's or whatever, but here in Canada this is definitely doable, and it's a great strategy for people who maybe used to work for a company with a built-in pension plan and benefits package, but now work for themselves (like myself).

Also, I'm sure some of you already know about this type of investing, guys like Sleazy would probably be up on this having come from an investment/insurance background. But not everyone does, and I doubt it's common knowledge.

Anyway, if even a few of you can benefit from this, or if it at least gets you thinking more about your future and your savings strategy then it's worth it. Peronally I usually put a little something into RSP's and the like every year, but using your tax refund with this temporary loan strategy looks pretty inviting.

Okay armchair investing experts, feel free to pick it apart. :1orglaugh