|
RRSP's are an interesting fella, and everyone will have their opinion on them.
Do you need the money? If not, and your TFSA is maxed out, then by all means, use the vehicle to get a tax refund - the value of that money today, combined with your RRSP could be important to you (time value of money too)
Some say to put money into RRSP, and use the tax refund to fund TFSA.
If you need that money now and you're earning more and more money, then I'd say don't contribute as you'll be getting larger refunds later on (in next 3, 5, 10 years) - its not like you lose the contribution room, and once its in, its in, it becomes quite expensive money to retrieve (other than through a tax deferred plan, like the first time homebuyers thingee) as you have to pay marginal tax on it (especially important if you are increasing your earnings).
Also consider the fact that tax rates will likely rise overtime given the fact that we, as the western world are just effectively 'kicking the can down the road' - someone has to pay for all of our parents when they retire and all the doucebags who get government defined benefit plans (YES, i said that right, government workers getting DB plans are d-b's as we have to pay for them, if you get a DB from a public company, good for you
Another option is to reinvest your tax refund (more RRSP or TFSA as mentioned) and enjoy the power of compounding returns (reinvested dividends, reinvested capital gains) - HOWEVER, you should watch what you have in these accounts, capital gains are taxed favouribly (1/2 of the gain), dividends attract the dividend tax credit (favourable to be taxed), REIT distributions are taxed at the highest marginal rate so they are good RRSP candidates.
Not all earnings are alike - so that is a MUST for consideration once you figure out what you want to invest in and your time frame.
RRSP contribution is a totally personal choice - 10 people with identical earnings will end up with 10 different decisions for a reason
|