If you save say $570/month into an RSP and start at age 25 with zero, by 65, all the while averaging a realistic aggressive growth annual return of 10%, you’d walk away with a sum of nearly $4mil. Seriously, think about that for a moment. Who wouldn’t want more money?
Try out the RBC RSP-Matic Calculator for yourself.
According to the Globe and Mail, the average Canadian’s car loan monthly payment is $570 and car lease monthly payment is $490. It is the norm for many loans to still be amortized over 5-8 years and still consumers are committing themselves to high monthly financial payments simply for a car. Keep in mind that these figures are not including the costs associated with car ownership such as insurance, fuel, and regular maintenance. Don’t think that if you own a new/newer car you are exempt from regular maintenance. All vehicles need that and most manufacturer warranties require you to not only follow structured maintenance schedules, if you don’t it can void your warranty or be in breach of your lease agreement.
David Fouad facts:
Do what I do, own less fancy cars. I had a car loan for 6 months when I was 21 and I paid it off. Now I pay cash for used cars. I keep them far longer than the average person with loads more mileage because I don’t want loans to mess up my personal real estate investment portfolio. It gives me too more freedom and power, not to mention, breathing room. Eg, 2001 Pathfinder has 315,000 kms and going strong. My 2009 Murano is considered old now. She’s doing strong and has a long life ahead of her. My Murano is my daily ride. I started saving at age 23 and I’m now 38.
Reason that I’m telling you all of this is because your monthly cashflow affects all of your monthly financial commitments. Eg, you have a large car loan payment, you can afford to buy less house. Every $500/month you take up is equivalent to $100,000 in house mortgage dollars that you could have spent on getting more house. Pay off those car loans, turn in that car lease, swap vehicles, do whatever it takes to break free. Got it? Good.
Here’s The Globe And Mail article.