# large RRSP room



## number4bobbyorr (Feb 24, 2015)

41 years old, live in AB, make good money (180k/yr); Wife at home with young kids. Very stable job. Have line of credit of $50k, car loan 10k. No other debt. Have substantial unused RRSP room ($190k). DC plan at work with $90k in it. House worth $500k, mtge $325k.

How do I take advantage of the huge RRSP room, in addition to scrimping and saving to put more into it monthly? Ie, what about borrowing $50k against the equity, putting it into very secure investment yielding less than 5% and adding the full refund into it. Realize the interest takes out the 5% but feel I am leaving money on the table with this RRSP room.

I'd be interested in any thoughts anyone may have. Thank you.


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## cougar (Oct 15, 2014)

If there is any chance of job loss and a severance in the future you can transfer the money to your RRSP if you have unused room. If job loss is not likely, you can make the contributions later and deduct them later. I guess what you need to figure out is what is the best bang for your buck right now-paying down the mortgage, paying off the car loan, RESP for the kids, RRSP for you or a spousal RRSP for your wife, TFSA or some combination of the above. I would personally lean towards paying down debt( car loan and mortgage) before borrowing money to put in my RRSP but that is just my opinion( I am not a financial advisor). Not sure if you have an emergency fund and life insurance but these would also be advised with young children.


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## Guban (Jul 5, 2011)

It depends on how aggressive you are. If you are conservative, pay off your debts. Willing to tolerate some risk, contribute to a spousal RRSP. If you are very aggressive, borrow and invest. Note the aggressive borrowing option is more suited to equities. Borrowing at 3% to invest at 3% doesn't make sense.


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## Cal (Jun 17, 2009)

I would try to think more long term, than a quick fix to boost up the RRSP contribution before the contribution deadline. Make a monthly RRSP contribution plan, open a TFSA, and accelerate the mortgage payments as best you can.


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## My Own Advisor (Sep 24, 2012)

Given your great income but ample debt and wife at home with kids, your job is the family income; I would kill your debt: LOC of $50k + car loan $10k + $325k mortgage = $385k in debt.

Personally I wouldn't borrow to invest right now.

When you have no other debt than your mortgage, then use some of your healthy income to start investing inside your RRSP or fund your TFSA or fund RESPs for kids as you pay down your mortgage. 

Just my $0.02!


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## cainvest (May 1, 2013)

I agree with others about paying off your debts first, focus on highest interest rate debts first.


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## Emjay85 (Nov 9, 2014)

My Own Advisor said:


> Given your great income but ample debt and wife at home with kids, your job is the family income; I would kill your debt: LOC of $50k + car loan $10k + $325k mortgage = $385k in debt.
> 
> Personally I wouldn't borrow to invest right now.
> 
> ...


Agreed.

Don't gamble with borrowing to invest with debt still kicking around. Pay that off first.

Also, I don't quite agree with borrowing to invest within an RRSP. Sure you will get a healthy refund one year but it is still debt to repay that is not tax deductable. Especially when you still have a LOC owing, it doesn't make sense.


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## Spudd (Oct 11, 2011)

I would also add, that with an income of 180k you should be able to save quite a bit, if you control your expenses. I think that should be an area of focus, if it isn't already.


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## Todd1966 (Feb 23, 2015)

Paying off your LOC and increased mortgage payments would be the same as having an investment ROI over 7%. You can't get that today in low risk terms. Leveraging to invest in this market will just get you into trouble IMHO. With an income of $180K I don't see why you need to be "scrimping and saving" for anything...my family of 4 lives in Alberta for about $60K per year quite comfortably.


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## number4bobbyorr (Feb 24, 2015)

Thank you all for the replies. I really appreciate your perspectives.


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