In the long run, which is better (Canada).. RRSP investing or an investment loan??

Question

My financial planner tells me he prefers to use investment loans, which allows for bigger capital to start and hence more growth in the long run. He says this method slightly edges the use of RRSPs to invest. Is he close to the mark?

Answer 1

No doubt you know what the loan risk is. The strategy will only work out if the investment yield exceeds the interest rate on the borrowed funds.

By any chance, has your planner been in the business during the past several years only? Perhaps since 2001 or 2002, say? If so, he would have witnessed a sustained bull market and good to excellent performance from margined or leveraged securities.

We're at market record highs, at the end of a multi-year broad-based advance. There are serious, respected and well-known bear opinions. Since you seem to be in Canada, perhaps you could take note of the long-term forecasts of Eric Sprott, for example.

If markets falter and begin to fail, loan positions will become traps. You're aware, of course, that the investor owes the full amount of the borrowed funds whether or not the asset has plunged in value ...

Lastly, I like the way your correspondent Bob the Shark describes the financial planner's motives (in Shark's first paragraph.) He's got a couple of really good points there, even if they're not expressed in your typically quiet-and-polite Canajun style, eh.

If it were myself, I'd stick with my RSP contribution. And I'd learn to invest autonymously, without an advisor. It might take time to build up sufficient knowledge, but it will produce sturdy self-reliance that will last a lifetime.

Answer 2

Of course your investment planner prefers investment loans.
first, he gets a kick-back if you arrange it through him
2nd, he has more starting value in your account so he gets either higher fees, because of more money, or a bigger amount paying him residual fees on the stuff he gets you to buy.

By the way, investing to RRSP.s are a fools game, you do not win in the long run and possibly pay more taxes.

DO NOT BORROW TO INVEST...If the investment goes bad you have the loss and the loan to pay off.

Find a certain amount of money you can invest every month (since you are in Canada) go to your bank, have $ "X" transferrred from your account to a mutual fund they think is right for you, You will never miss the money after a couple of months, when you can, increase this amount. your money will grow, there is no "fee" attached to buying these funds and depending on the type of fund you buy, gains can be taxed less when you sell

Answer 3

first of all, quit listening to others, and pay interest to your self fairly. Your investments could count number upon your human being making an investment understanding, personality, chance urge for nutrition, funding horizon, and how a lot money you should make investments. you're saying you've an pastime in commodities, yet you want the "most secure and difficulty loose" funding. regrettably, those 2 objectives are inconsistent because commodities, ordinarily, are risky and risky. in case you do favor to get into commodities like gold and silver, purchase the ETFs like GLD and SLV that own those commodities with out your having to own the truly metals. the concern with metals is that each and each human being the metals ever mines are nevertheless someplace on earth. the in trouble-free words commodities i love are oil and organic gas, and when you consider that we are determining of them. maximum (no longer all) wealthy people grew to grow to be wealthy by using possessing authentic property. The land is finite, and with the increasing inhabitants, it is going to always be in call for. in case you want a difficulty-loose way of possessing authentic property, i'd advise doing it by skill of REITs. you'd be getting possession to boot as some earnings in a difficulty-loose way.

Answer 4

right now only invest in china mutual funds.