Should I cash my RRSP to pay off my mortgage? + MORE Jan 15th

How high will home prices get in 2025? Depends where you live  Global News TorontoExpect an ‘unleashing of demand’ for real estate this spring, says CREA  Toronto StarCanadian Real Estate Association expects higher demand for homes in 2025, but not for condos  The Globe and MailNational home sales finished year on strong note with rebound expected in 2025  CBC.caCanada real estate: Home prices rose 3.8% in Q4 as sluggish market starts to pick up  Yahoo Canada Finance

Ask MoneySense
Is it a good idea to pay off my mortgage with my RRSP money and then put what my mortgage payment was back into the RRSP once I’ve paid it off? What are the pros and cons of this strategy to being mortgage free?

–Mike

Pay off a mortgage or keep investing with RRSPs?

Paying off your mortgage with your registered retirement savings plan (RRSP) and then putting what your mortgage amounts would have been back into the RRSP may not be a good strategy for several reasons.

If you withdraw any money from your RRSP, it is taxed as income. There is withholding tax on the withdrawal initially, but the total tax depends on your other sources of income for the year when you file your tax return.

If you withdraw from an RRSP, you do not recapture that initial RRSP contribution room and you may not be able to re-contribute the same amount back to the RRSP unless you have sufficient current room. This means you will forgo years of compounded returns on the money you have withdrawn, and it can never be made up…

Your net worth is calculated by taking your assets and subtracting your liabilities. Both investing and repaying debt can boost your net worth as a result. The question is: which is better? In our guide about paying off debt versus investing, we cover the options from a number of different perspectives so you can decide what is best for you.

Should you accelerate your mortgage payments or invest?

Making the right choice boils down to prioritizing and projecting. But here’s the thing: mortgage debt repayment is investing. Your return comes from interest savings that accrue by paying down the principal portion of your debt.

Sometimes, Canadians choose to invest in other assets instead of paying down debt. If you think you can earn a higher rate of return on your investments than the interest rate you’re going to pay on your debt, in theory, you might be better off investing. In practice, though, it depends.

There are practical considerations to help determine which investments are better than paying down your mortgage faster…

The U.S. Securities and Exchange Commission has sued billionaire Elon Musk, saying he failed to disclose his ownership of Twitter stock in a timely manner in early 2022, before buying the social media site. 

As a result, the SEC alleges, Musk was able to underpay “by at least $150 million” for shares he bought after he should have disclosed his ownership of more than 5% of Twitter’s shares. Musk bought Twitter in October 2022 and later renamed it X. 

What’s the SEC’s complaint?

Musk started amassing Twitter shares in early 2022, and by March of that year, he owned more than 5%. At this point, the complaint says, he was required by law to disclose his ownership, but he failed to do so until April 4, 11 days after the report was due. 

Musk’s lawyer, Alex Spiro, said in a statement that the lawsuit “is an admission by the SEC that they cannot bring an actual case” since Musk has “done nothing wrong.” He called the lawsuit a “sham.” 

“As the SEC retreats and leaves office—the SEC’s multi-year campaign of harassment against Mr…