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  • Nov 1st, 2010 5:59 pm
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Member
Apr 27, 2007
226 posts
21 upvotes
Toronto

RRSPs

I recently got a full-time job making around 50k. I'm wondering if I should do RRSP...

I might be making 56k depend on if they giving me the raise. Should I do RRSP then?

How much money should i invest in RRSP

Is there other options?

Last question, should i just go to a bank (most likely TD) for financial advice?
33 replies
Member
May 30, 2007
398 posts
21 upvotes
Toronto
Lots of things to consider at this point. Such as....

-Do you have debt? (credit card, student debt)
-Do you have a mortgage?
-Do you have life insurance/disability insurance?
-Do you have an emergency fund set up?
-What are your monthly expenses?

We would need a few more financial particulars to offer appropriate advice. Here's a great article to start..

http://cawidgets.morningstar.ca/Article ... ?id=343264

IMHO the biggest goal now that you have a full time job and a great starting salary is to tackle consumer debt, which when you rid yourself of it this will really help you to gain your footing financially. Once you have that gone, and you've budgeted some money to go towards disaster planning (ie the life/disability insurance, the emergency fund) then yes, RRSPs and TFSA savings would be a great place to focus as the power of compound interest is huge. If you start early you have a huge advantage.

Good luck!
Member
Apr 27, 2007
226 posts
21 upvotes
Toronto
I have 2 credit cards with no debt on each but with a limit of 7000 total

I have no other debt

No Mortgage, thinking of buying a house in a year, 2 or 3

I have insurance with my job

No emergency fund, just what I have in my bank accounts

Have about 10k saved.

Living Costs are low, living with family - 600 a month or so.

I'm also contritubing to a pension fund if that matters

And thanks for the article looking through it now
Deal Addict
Mar 10, 2010
1595 posts
589 upvotes
If you have 10K saved why don't you use that to pay off your credit cards? Especially if they're at normal CC rates!
Deal Addict
User avatar
May 15, 2010
2000 posts
115 upvotes
North York
Of course you should open a RRSP and contribute the maximum amount allowed (18% of your income).

And make sure you put investments (eg mutual funds) in your RRSP not just a savings account.
Deal Addict
User avatar
May 15, 2010
2000 posts
115 upvotes
North York
Clacker wrote: If you have 10K saved why don't you use that to pay off your credit cards? Especially if they're at normal CC rates!
I think he meant that his credit cards' limit is 7000, not the balance.
Jr. Member
Dec 14, 2009
112 posts
28 upvotes
unknown1 wrote: I have 2 credit cards totalling $7000 - continual use but paying it full off everytime

I have no other debt

No Mortgage, thinking of buying a house in a year, 2 or 3

I have insurance with my job

No emergency fund, just what I have in my bank accounts

Have about 10k saved.

Living Costs are low, living with family - 600 a month or so.

And thanks for the article looking through it now

Dear gawd yes. If you want a home, have no debt (you pay your CC's every month) AND you're making 50k a year you definitely want to be contributing to an RRSP.

- Contributing to your RRSP will reduce the amount of tax you will pay.
- With an RRSP you can take advantage of the Home Buyers Plan.
- If you develop a 50k/year life style with a home you'll want to have money put away.
Deal Addict
Mar 10, 2010
1595 posts
589 upvotes
Dilton wrote: I think he meant that his credit cards' limit is 7000, not the balance.

Ah, you may be correct. If that's the case, then starting an RRSP is a no brainer.
Member
Apr 27, 2007
226 posts
21 upvotes
Toronto
Clacker wrote: Ah, you may be correct. If that's the case, then starting an RRSP is a no brainer.

Yes that is the case.

How much should I invest.. I guess the good thing is that I can use that RRSP money for my home correct but will have to put back the money in in 5 years correct?
Deal Addict
Dec 11, 2007
1958 posts
582 upvotes
Markham
yes i believe you have to pay it back over time. and i think the payback amount is not tax deductible

RRSP homebuyer plan should be a final resort option in my opinion.
Member
May 12, 2008
412 posts
44 upvotes
unknown1 wrote: Yes that is the case.

How much should I invest.. I guess the good thing is that I can use that RRSP money for my home correct but will have to put back the money in in 5 years correct?
You can take up to 25,000 out and you have up to 15 years to pay it back
Deal Addict
Jul 8, 2009
2028 posts
482 upvotes
Edmonton
I'm a planner and I think RRSPs are a great device and virtually everyone should have one. I can't believe all the people who tell me they can't be good for us if the government wants us to have them, and that we who have them won't end up better off. Darn, conspiracy theorists.
Banned
User avatar
Dec 10, 2008
1659 posts
54 upvotes
The reason I like rrsp is if I decide not to work for a year, I can take 10k out of it tax free.

As a retirement vehicle, it's a waste of time. All my familly died of stroke in their 60's.
Sr. Member
Dec 16, 2006
657 posts
223 upvotes
Central Ontario
mrbeachman wrote: As a retirement vehicle, it's a waste of time. All my familly died of stroke in their 60's.

If I kick off in my 60's - my wife / son / grandchildren will end up with it. What's wrong with that?
Jr. Member
Nov 11, 2009
117 posts
4 upvotes
Don't forget about TSFA as well. I would try to find a balance towards RRSP and TSFA contribution. Starting an RRSP is great with your plans to purchase your first home in 2-3 years. You can withdraw up to $25K from your RRSP for the HBP (and take up to 15 years to "repay" back to your RRSP).
Newbie
Sep 28, 2010
6 posts
ontario
I have some rrsp in a high intersest saving account and am looking to lock it away for 5 years.Should i do it now or wait till next year,hoping interst rates go up.PPLS trust is at 3.3%,should i wait till it's around 4 or more,or lock it in now.
Deal Addict
User avatar
Aug 12, 2006
3713 posts
51 upvotes
mrbeachman wrote: The reason I like rrsp is if I decide not to work for a year, I can take 10k out of it tax free.

As a retirement vehicle, it's a waste of time. All my familly died of stroke in their 60's.
Can you take out from RRSP Tax Free? Dont you have to pay 10-20% withholding tax?
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User avatar
Dec 10, 2008
1659 posts
54 upvotes
champlinD wrote: Can you take out from RRSP Tax Free? Dont you have to pay 10-20% withholding tax?

You get a refund.
Deal Addict
Dec 13, 2004
3495 posts
189 upvotes
Toronto
keep in mind since you contribute to a pension your contribution room towards RRSP's will be limited.
Deal Addict
Nov 26, 2005
3214 posts
387 upvotes
Vancouver
max out TSFA first
RRSP next

TSFA is investment income tax free.
RRSP is tax deferred, but no reduction in tax if same marginal tax rate.
save you RRSP room for spousal RRSP if you ever marry...

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