Should I contribute to a RRSP or pay down my mortgage?

Should I contribute to a RRSP or pay down my mortgage? (2 min 08 s)

Added on November 27, 2015

Description
People often ask whether it's better to pay down their mortgage or save with financial tools such as RRSPs, RESPs and TFSAs. Angela Iermieri, Financial Planner at Desjardins, gives her take on the question.

  

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Should I contribute to a RRSP or pay down my mortgage? (2 min 08 s)

Added on November 27, 2015 | Personal

Note: The information in brackets describes the visual and audio content of the video that is not dialogue or narration.

[Music]

[In a large room filled with windows, we see a television screen that reads, "The WebFinance Zone." A woman approaches.]

[The woman's name and title appear at the bottom of the screen: Angela Iermieri, Financial Planner for Desjardins Financial Services Firm Inc.]

People often ask whether it's better to pay down their mortgage or save with financial tools such as RRSPs, RESPs and TFSAs.

[The screen behind the woman shows the image of a scale. The word "mortgage" appears above one of the scales with the word "RRSP" above the other.]

Everyone's financial situation is different, so there's not just one right answer.

[The screen behind the woman depicts a green check mark in a box with the words "Right answer." Then several green check-marked boxes appear successively.]

That being said, paying off debt versus investing is a pertinent question to ask yourself when managing your finances.

That's why you need the Desjardins Financial Plan to set your short-, medium- and long-term objectives. Then, your Desjardins advisor can analyze your situation to help you identify your priorities and implement strategies for now and for later.

[The screen behind the woman depicts the image of a checklist and a pen, with the words "financial plan."]

Let's have a look at a few different plans, their selling points and most of all when we should use them for best results.

So, interest rates are low at the moment—it could still be beneficial to ramp up your mortgage payments.

[The screen behind the woman depicts a bar chart with two vertical bars. Each bar has a percentage symbol on top of it. The first bar is higher than the second.]

Start by comparing your mortgage's interest rate with the rate of return on your investments and projected tax results.

[The words "tax deduction" in green on a white background appear on the screen behind the woman.]

it comes to RRSPs, the higher your tax rate, the better your tax deduction. This deduction often translates into a tax return, which you could use to pay your mortgage. Kill two birds with one stone!

If you have any children under 17, the registered education savings plan and government grants are definitely something to consider.

[The screen behind the woman depicts an image of two children's heads, one with short hair, one with long.]

The tax-free savings account, TFSA, is your best bet for short- and medium-term projects since withdrawals are tax exempt. TFSAs don't get you tax deductions, but they can be a great way to save for your retirement, especially if you've used up all your RRSP contribution room.

[The screen behind the woman displays the words "Projects. Short- and medium-terms."]

As you can see, there's no silver-bullet solution. Your family situation, income, age and objectives are all important factors to consider when planning for your financial future.

[The screen behind the woman displays the words "The WebFinance Zone."]

With the Desjardins Financial Plan, you can find the right strategies to optimize your finances…for today and tomorrow!

[Words appear on a white background: "Questions? questions@desjardins.com. The Desjardins logo and "Desjardins Wealth Management" appear below.]

[Music]

If you have any questions, please feel free to send them to the address you see on-screen. I look forward to hearing from you!

[Desjardins logo on a white background with "Desjardins Wealth Management.]

END OF TRANSCRIPT