Registered Retirement Savings Plan

from To Borrow or Not to Borrow for Registered Retirement Savings Plan:

But when does borrowing for your Registered Retirement Savings Plan (RRSP) make sense? There are instances, experts say, when investors can profit from taking out a loan. However, others -- such as Mimi Tang, a manager at Imperial Financial Services in Richmond, B.C. -- urge caution before delving into debt for the sake of an RRSP.

"I would rather the client be ahead of the game," she says. As a financial planner, Ms. Tang notes that playing catch-up for your RRSP goes against the basics of her profession -- planning ahead.

But like all rules, there are the proverbial exceptions. Ms. Tang has one client, for example, who is expecting a large severance package but will not receive it by the RRSP deadline of Feb. 29. In this case, she recommends that the client borrow the money and pay it back as soon as the severance cheque is delivered.

Ms. Tang says it might be worthwhile for a first-time RRSP investor to borrow in an effort to kick-start an annual contribution plan. But, for the most part, she'd prefer her clients take a long, hard look at their budget and determine whether they can afford to borrow.

The 2007 Federal Budget proposes to increase the RRSP conversion age from age 69 to age 71. Once these budget proposals become law, this change will be effective for 2007. This means that 69 and 70 year olds with earned income or unused RRSP contribution can make RRSP contributions up until the end of the year in which they reach age 71.

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Please note: Ms. Mimi Tang, offers financial planning and insurance services as an independent representative, under Mimi Tang Wealth Management and Consulting LTD. and these services are offered independently of PEAK Securities.

PEAK Securities inc., an IIROC registered, full service investment broker, limits its responsibility to investment products such as stocks, bonds, and mutual funds. PEAK Securities inc. is a member of the Canadian Investor Protection Fund.

Call Mimi Tang at 604-566-9998 or email mtang@peakgroup.com
for financial planning in Vancouver, British Columbia, Canada.