Team,
I am new and wanted to jump right in with the groups feed back? I recently decided to stop trying to invest my own money to offset my mortgage interest and took a large portion of my SDRSP and purchased my mortgage. My reasoning was simple? I needed to have some safe place for much of my money and like many of us who pay a mortgage? Well, if you earn 7%-8%, honestly, you are good, better than me!. Now you pay 4% for your mortgage... Not bad, but when you minus the mortgage payout from the 7-8% growth you are now at 3-4% growth with risk.
You got a 100K mortgage and a 100K RRSP! What do you do? - You can just buyout your mortgage and call it a day. "solid 4-5% return to your RRSP! Or, lets say you are 30-50 years old and you use the room in your house (Line of credit) to borrow or max your SDRSP? Your tax rebate is 30-35%. Now you borrow $100K for the RRSP and get a $35K return. So you made 35% on the 100K borrowed. Honestly;the best return you have had in years! Now lump it with the $200K in your RRSP for $235k. You got a $200K mortgage that you stretch to 25 years just to keep the payment low. You now pay the interest to yourself!... Your interest now gets deposited back in your RRSP for you to re-invest at your 7%-8%. "Remember: Good debt and bad debt are two very different things".
At the end of the day? We are all different and have very different investment plans. By doing this SDRSP you dont fight the delta on interest out VS interest in? Owing money is not bad if you pay yourself the interest.
Who has feedback? I have many friends who just cant get past the mortgage part? Am I crazy or did I not remove the biggest interest loss we all face with every mortgage payment? Remember, the weekly,bi-weekly or monthly interest just get deposited back in my SRRSP and the principal drops just like your every day mortgage... Geez, If I had a lower income in the future; I could actually spend the Interest return and pay the lower 18% tax. But this is a different topic! Or is it???
I am new and wanted to jump right in with the groups feed back? I recently decided to stop trying to invest my own money to offset my mortgage interest and took a large portion of my SDRSP and purchased my mortgage. My reasoning was simple? I needed to have some safe place for much of my money and like many of us who pay a mortgage? Well, if you earn 7%-8%, honestly, you are good, better than me!. Now you pay 4% for your mortgage... Not bad, but when you minus the mortgage payout from the 7-8% growth you are now at 3-4% growth with risk.
You got a 100K mortgage and a 100K RRSP! What do you do? - You can just buyout your mortgage and call it a day. "solid 4-5% return to your RRSP! Or, lets say you are 30-50 years old and you use the room in your house (Line of credit) to borrow or max your SDRSP? Your tax rebate is 30-35%. Now you borrow $100K for the RRSP and get a $35K return. So you made 35% on the 100K borrowed. Honestly;the best return you have had in years! Now lump it with the $200K in your RRSP for $235k. You got a $200K mortgage that you stretch to 25 years just to keep the payment low. You now pay the interest to yourself!... Your interest now gets deposited back in your RRSP for you to re-invest at your 7%-8%. "Remember: Good debt and bad debt are two very different things".
At the end of the day? We are all different and have very different investment plans. By doing this SDRSP you dont fight the delta on interest out VS interest in? Owing money is not bad if you pay yourself the interest.
Who has feedback? I have many friends who just cant get past the mortgage part? Am I crazy or did I not remove the biggest interest loss we all face with every mortgage payment? Remember, the weekly,bi-weekly or monthly interest just get deposited back in my SRRSP and the principal drops just like your every day mortgage... Geez, If I had a lower income in the future; I could actually spend the Interest return and pay the lower 18% tax. But this is a different topic! Or is it???