Getting a tax refund? Before spending it all, read my suggestions below.
Not getting any refund or not enough of a refund? Start a monthly RRSP now! You now have 12 months ahead of you to make this happen. It is so easy to save for a comfortable retirement and increase your chances of a refund next year. Just let us know and we will prepare the required forms for when you pick up your tax return.
Many of you will be getting a tax refund soon. Before spending your refund remember that a refund isn’t a gift. It is the return of an interest free loan you made to the Government for overpaid taxes. Even if advisors like me tell you that the best tax refund is no refund at all, the truth is that it is for most, the best forced saving. So, now when it comes back to you, think hard before spending frivolously. Why not spend some and save the rest!
Here are some thoughts on how you can use the refund to better your financial position.
1. Begin or add to your emergency savings plan: If you don’t have a cash emergency fund set aside, put some of your tax refund in a high interest savings account like ING or Dundee savings.
2. Make a 2010 RRSP contribution: Get a head start toward your 2010 RRSP contribution. This way you will add to your retirement fund, have more to spend later in life and get a tax saving for next year!
3. Invest in a TFSA: You can add $5000 a year to a Tax-Free Savings Account. You can save it short-term or invest it for wealth accumulation and retirement!
4. Add to your children’s RESP: And get the 20% government Grant! You know this will cost you a bundle and an education is the best investment!
5. Reduce the mortgage: Please remember however that with interest rates this low, you will likely be better off investing your refund. More on that in a future Blog post. Stay tuned!
Every situation is unique, whenever in doubt, just call us. We will review your situation and help you make an appropriate decision!