Another fun historical article from 2009 talking about RRSP season, but also discussing the previous years Stock Market Implosion and also the dropping of interest rates, which end up getting down to our low rates of today.
RRSP Season Complete
With not much flurry the RRSP season ended last night at Midnight, and I must admit I did do the “last minute buy” trick after doing an initial “mock-up” of my taxes and remembering I needed to buy more RRSPs to lighten my tax load.
The reason was simple, I will be in a much lower tax bracket in coming years and last year will be my highest tax bracketing for a while, so the math was quite simple. I didn’t “buy” anything, I simply transferred cash into my self-directed account and will wait to see what comes of this market and attempt to buy somewhere near the bottom (which I have no idea when that will be).
The gentleman I spoke to on the phone (I used phone banking access to ensure the transaction was counted this year), said they were busy, but not as busy as in previous years. My guess is most Canadians are not as worried about their RRSPs right now (more worried about day-to-day issues like keeping their jobs).
Stock Market Apocalypse Redux (2008-9)
Armageddon on the stock markets continues, with investors running about like chickens with their heads cut off. With Warren Buffett admitting even he has made mistakes and with some very mediocre (if not bad) numbers coming out the SELL frenzy seems to be continuing.
With Canada’s GDP weakening month by month (according to Stats Canada) I would think the DOWN roller coaster will continue in Canada for this week, but maybe some good numbers from the banks announcing this week might actually slow or stop the slide, it really is a confused and confusing market right now.
Interest Rates (2008-09)
Last year at this time the Bank of Canada slashed interest rates to 3.5% on their overnight rate and I thought there was no way they could drop much lower than this, goes to show just how good at financial prognosticating that I am. We are currently at 1% and today there may be an announcement of an overnight rate of 0.5%, which staggers my imagination.
I have had folks already comment about my Now Is the Time To Pay Down Debt comment, and ask why I say that. Right now your money’s ability to pay off debt is at it’s Peek, every dollar you pay down on your debt will mostly (if not completely) go towards the principle of the loan, and you are paying it down that much faster.
Should you borrow more money now? It depends is my answer, as I have said previously, I neither have the stomach or the nerves to borrow money to use to invest in Stocks or such (it is just not in my nature), but I have heard folks say that NOW is the time to do it (I don’t agree if you are asking my opinion). Risky manoeuvres like the Smith Manoeuvre might look attractive right now, but think of the folks who tried this out 2 years ago, and where they might be right now?
Wow. Hate to steal your thunder for tomorrow’s post, but my mortgage is now at 1.75% interest. I should probably get a print out of that, since that’s an absurdly low rate. Reminds me of teaser rates for credit cards. It might go a little lower yet, but I’m thankful already.
My wife and I did the same as you a couple years back when she was switching from full-time to part time work: make a big RSP contribution. It just made sense, since her marginal rate wouldn’t be that high for the foreseeable future.