Do RRSPs Make Sense
Many people ask if investing in an RRSP makes the most sense, or are there other ways to invest in a tax efficient manner? The answer is yes to both. It depends on the stage of your financial life.
Leveraging to invest in non-registered funds can be more effective than RRSP's, however, there are dangers to leveraged investments that are not for rookies. Although mathematically this strategy is better than an RRSP, it is less liquid and you could end up owing more than you borrowed. A minimal RRSP portfolio may not affect any future Old Age Security clawbacks. You need to have your financial affairs in a certain order and other liquid investments before you engage in this type of planning.
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However, at the right time, this can prove to be a very effective strategy in allowing your money to grow faster, while at the same time reducing future taxes, without forefiting any tax deductions today.