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RRSP Loans and Manulife Bank
Many Canadians have recognized the need to secure their financial future by contributing to an RRSP. Proper financial planning can help you meet your retirement goals in the future, and lower the amount of income tax you pay today.
There are often other financial demands that can make contributing to an RRSP difficult and it can often be a real challenge to maintain the discipline of regular RRSP contributions throughout the year. An RRSP loan is a simple solution that may help you maximize your retirement contribution and reduce the amount of tax you pay.
Manulife Bank RRSP loans offer convenience, competitive interest rates starting at Prime, automatic approval, and a 90-day loan payment deferral option. And you can make extra payments to your loan at anytime without additional fees. What could be easier?
The best time to start contributing is now
Even if you've missed making your Registered Retirement Savings Plan (RRSP) contribution in previous years, there's no time like the present to start saving for retirement.
Don't let a lack of cash keep you from taking advantage of this powerful financial tool this year. An RRSP loan can help you realize tax savings, increase the eventual size of your RRSP, and help you stick to your savings plan.
Start with the right tools
A RRSP is one of the best tools you have for ensuring a comfortable retirement. With a Manulife Bank RRSP Loan you can:
- Top-up your RRSP and reduce your unused contribution room;
- Increase your RRSP growth potential - through the power of compounding, the larger your initial investment and the longer it remains invested, the greater your investment growth potential;
- Reduce your taxes now;
- Establish a disciplined savings routine;
- Defer your first loan payment by 90 days which can give you time to apply your tax refund to reduce your loan balance.
With the help of your financial advisor, taking care of your RRSP contribution is easier than ever.
Real value for your RRSP dollar
Manulife Bank's RRSP Loan program provides real value to investors like you by offering:
- Loan amounts of $1,000 to $16,500;
- 90-day payment deferral option;
- Loan approvals in seconds, based on your good credit history;
- No fees to: apply, change payment dates or make lump sum payments;
- Attractive floating interest rate.
Two RRSP strategies
One of the key benefits to contributing to an RRSP is that it immediately reduces the amount of income tax you need to pay. If you don't have the cash to make a contribution, an RRSP Loan is an excellent alternative.
Here's an example:
Amy and Karl have both neglected their RRSP in the past and each has $10,000 in unused contribution room. Both have resolved to be more dedicated in the future.
As the RRSP deadline approaches, Amy takes out a $10,000 RRSP loan at 6% and invests it immediately. Her contribution results in a $4,000 tax refund (40% tax bracket) which she immediately uses to pay down her RRSP loan. Over the next 12 months, she repays the remaining $6,000 plus interest, or approximately $516 per month.
Karl decides to make regular RRSP contributions starting after the RRSP deadline. He makes contributions of $516 per month over the next 12 months.
Both earn an 8% annual return on their investment. How do they fare after one year?
Short-term gain
Amy's $10,000 has grown to $10,800 and the required loan payments ensured that she didn't stray from her RRSP savings plan.
Although Karl was tempted on several occasions to spend his cash before his monthly contribution, he was able to stick to his RRSP contribution plan and contributed a total of $6,192, which grew to $6,613 by the end of the year.
Long-term gain
After one year, Amy has saved over $4,000 more than Karl. What does this mean in the long term? With an 8% annual return, if both retire in 20 years, Amy's $10,800 will have grown to $50,338, while Karl's $6,613 will have grown to only $30,823, for a difference of more than $19,000!
Make your RRSP a priority this year with an RRSP loan from Manulife Bank.
*Manulife Bank RRSP loans are only available through financial advisors
Borrowing to invest in an RRSP may not be suitable for everyone. You will need the financial means to meet your loan obligations. In addition, investments held in an RRSP may fluctuate in value. You should be aware that regardless of the performance or value of any investments held in your RRSP, you will be required to meet your loan obligations in full. Talk to your financial advisor to find out more about the advantages and obligations of borrowing to invest.
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#102, 9802 97 Avenue
Grande Prairie, AB
T8V 7K2
Bus: 780-532-4400
Toll Free: 800-654-3684
Fax: 780-539-6669
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Disclaimer:
- Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments.
- Please read the fund's simplified prospectus before investing.
- Mutual fund securities are not guaranteed, their values change frequently and past performance may not be repeated.
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