Sheltered Investment Calculator
Frequently Asked Questions About The Calculator
Q: What does the calculator do?
A: This calculator was designed to illustrate the effects of compounding growth within an RRSP. It compares the growth of a single contribution inside and outside of an RRSP over one year, and over a number of years. Note that although you do not pay income tax on the earnings on your investments while they are inside the RRSP, income tax must be paid when those earnings are withdrawn. However, you may be in a lower tax bracket at that time.
Q: What assumptions are included in the calculator?
A: The calculator assumes you'll make the same investment return each year that your money stays invested. It was designed this way to isolate the effects of compounding for educational purposes.
The calculator assumes that growth on an investment outside an RRSP is taxed as income. It does not take into account that capital gains or dividends earned are taxed differently.
Q: Do the results consider the difference between an investment made early in the year and one made later in the year?
A: The calculator assumes the contribution is made at the end of February of year 1, that the tax refund is applied in April of year 1, and that the final value is calculated as at the end of year X, where X is the number of years you said the amount would be invested.
Q: Who do I contact if I need help or have questions?
A: Contact us if you have any questions or comments. Please tell us what you think of this calculator.