I'm planning to invest/save some extra money on a monthly basis probably around $100-200 or so. I'm not sure where I should put it from the following options

  • RRSP (probably open a TD e-series account)
  • Non-registered Mutual Fund (again in a TD e-series account)
  • Extra Mortgage payments

About Me

  • I'm in the high-rate tax bracket and
  • I have regular savings for holidays/emergencies/RESP and I have an ING Mutual Fund.
  • I have a fair amount of headroom in my allowed RRSP contributions.
  • I have a 5 year fixed rate mortgage at 3.79%
  • I'm 36

The plan would be for these payments to form part of a long term investment but probably not as far out as retirement age

  • Do you max out your tax-free savings accounts? That would be an idea.
    – JB King
    May 22, 2013 at 16:23

2 Answers 2


I would not prepay a loan with a 3.79 rate, with just a tiny bit of inflation that's nearly free money.

I would always seek to first max out a tax deferred savings program before making investments that are not receiving preferential tax treatment. (outside of emergency money, which you say is already dealt with) Especially since you effectively get an immediate return on the investment = to your marginal tax rate. (or to look at it another way, it takes a much smaller amount of money 'out of pocket' in order to make the investment)

Every thousand you could put into a tax deferred account now, is generally equivalent to putting in several times that amount 20 years from now.

OTOH Once you've maxed out the tax deferred savings, or if you need to set aside money for large purchase with a big time horizon that is short of retirement age, then making regular monthly investments in a no-load index fund with a quality company is a great way to go as you will be taking advantage of Dollar Cost Averaging, and a good deal of diversity, which is a great way to put money into the market. Just make sure you are investing in a fairly broad index, such as the S&P500 and not a little dinky 30 stock index like the Dow.


The RRSP is like our 401(k), right? money goes in pre-tax? I'd go with that. Over time, you stand a near certain chance to get a better return than your mortgage rate.

  • That's correct an RRSP is like a 401k so I'd get a tax rebate on my payments Jun 16, 2011 at 19:29
  • And I understand the 3.79% interest is not a deduction. No big deal. You are still better investing for the long term. Jun 16, 2011 at 20:13
  • Correct, Canadians can't deduct mortgage interest :( Jun 16, 2011 at 21:17

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