If you follow any of the other Canadian personal finance blogs around, you would have read about the new and upcoming book written by Preet Banerjee called "RRSP's". 

For non-Canadian readers, RRSP stands for "Registered Retirement Savings Plan" which is basically an investment account for Canadians that allow investments within it to grow tax free (along with other perks).

Ok, lets get down to the book review. 

Who is Preet Banerjee? 

Some of you reading this will know Preet Banerjee as the blogger behind "WhereDoesAllMyMoneyGo".  What most people don't know is that Preet is a former amateur race car driver and a full time financial planner for high net worth clients.  What I think separates Preet from other financial advisors is that he's willing to give away sound financial strategies that don't benefit him directly. For example, there is a section in the book that shows that paying off the mortgage first can have benefits over contributing to an RRSP at the same time.

What is this book about?

This book starts off with explaining the basics of RRSP's and how to calculate your tax return based on your RRSP contribution.  From there, it moves onto 41 RRSP based strategies from basic to more complex. 

Even though i've done quite a bit of research on RRSP's, I have learned a few things from this book, especially with the detailed scenario comparisons.

What I liked about the book?

My favorite parts of the book where the chapters that involved scenario calculations.  In particular, the detailed numerical comparisons between:

  • Mortgage vs. RRSP and various combinations.
  • RRSP vs. Non-registered portfolio
  • RRSP Meltdown effectiveness and associated calculations
  • Traditional RRSP vs. Straight Leverage vs. Preet Principle

What did I learn the most from this book? 

I knew this before, but never really put into context HOW important it is. Always, ALWAYS use your RRSP tax refund efficiently.  Whether it's paying down debt, re-contributing to your RRSP, or putting it in a non-registered account, the overall benefit of the RRSP depends on it.

What needs improvement?

There is nothing in particular that I didn't like.  One little note though, at the beginning, it explains how to calculate your RRSP tax refund based on your salary and total taxes paid in.  Another way to calculate your tax refund is to  simply multiply your marginal tax rate by your total contributions.  For example, if you contributed $5,000 and you're in the 40% tax bracket, you should get back approximately $5,000 x 0.40 = $2000. 

Final Thoughts:

  • I highly recommend this book for all Canadians who want to understand RRSP's in depth.  It's a book that is easy to read for both the beginner and more advanced.

Stay tuned for tomorrows post.  Preet has been generous in offering MDJ a few copies to give away.

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