I wrote this before the dawn of the TFSA, so I have spruced it up with where your TFSA might fit into this equation.
The data I mention are in the following posts: Case 1: Put It In The Bank , Case 2: Refund to RRSP, Case 3: Refund to Mortgage
I think what the plethora of numbers over the past few days has show is that:
- Putting money in your RRSP is a good thing. The money is not just retirement money, it is “catastophe” money too, so if you have RRSP room, I would say use it.
- Remember, that your TFSA is a better choice as an emergency fund.
- Should I pay off my mortgage or max out my RRSP? Yes is my answer. Do either, but do at least one, is my advice. There isn’t a wrong answer here folks, both are good things and if you can do it, good for you!
- Of course max’ing out your TFSA might make more sense now.
- An ideal “mixed” idea is to put your money in your RRSP, get your refund and then put that on your mortgage, and you then end up with a nice RRSP, and a mortgage paid off sooner. If you need my advice, that would be my suggestion.
- Now you could put your money in your TFSA if you were saving to buy a house as well.
If you want the excel spreadsheet to fool around with it, send me an e-mail and I’ll mail it to you (it’s pretty straight forward).
More real life rants to come.