Borrow to invest in your RRSP

In some cases, it may be to your advantage to borrow money to invest in your RRSP.

In fact, the real cost of the loan could be offset by the resulting tax savings and your investment income will grow in a tax shelter.

For example, suppose you want to contribute $2,000 to your RRSP this year. Let's see what happens if you borrow $8,000 to raise your contribution to $10,000? Our example is based on the hypotheses that it is a 5-year loan at 7.20% interest¹.

• This $8,000 contribution will entitle you to a tax refund of $3,360, which you would immediately use to pay back a portion of the loan, bringing your balance to $4,640 ($8,000 − $3,360).
• You would then have 5 years to pay the balance, so your loan would cost $5,525 including interest.
• Ultimately, you will pay back a $5,525 loan and benefit from an $8,000 RRSP contribution.

Look at the following table and compare a $2,000 RRSP contribution and a $10,000 contribution, assuming an annual return of 7%¹.

Time span	Value of the $2,000 contribution	Value of the $10,000 contribution
After 10 years	$3,934	$19,672
After 15 years	$5,518	$27,590

Interested? Go to the RRSP loan section to find out what options are available to you.

	At the caisse (Members and non-members)	Contact an advisor at a caisse.

1. Interest rates used here are provided as examples only.