In financial planning, we talk a lot about efficiency and finding the best way to achieve your goals. One question that is good is this one:
“What’s the best thing to do with my money? Invest? Pay down the mortgage? Save for a rainy day? Save for the kids’ education?”
Guess what? This is not a ‘yes or no’ question. What if you could do a bit of all of it.
Say you are someone who makes $75,000/yr. And let’s say you do what you’re supposed to and you save 10% – $7,500. What’s the best way to increase your net worth with this $7,500?
Let’s say you put this in your RRSP. That means you would have $7500 invested plus $2925 in tax return.
Let’s say you put this into your Registered Education Savings Plan – it will hold $2500/yr and get matched at 20% or $500 in this case.
You still have $425. You could put this in your TFSA or pay down your mortgage – whatever you like. But here’s the tally of what net worth you have added with this strategy:
That’s a 46% first year rate of return if you want to think of it that way!
And just a sample of the types of ideas we come up with when you do a financial plan with us. Call us today to get the ball rolling.