If you happen to be one of the many Canadians who take out an annual RRSP loan every year right before the deadline in order to make your contribution, AND you happen to be a higher risk-tolerant investor, here are a couple of ideas for you to consider:
GET AN RRSP LOAN WHEN THE MARKET HAS A CORRECTION
If you are able (i.e. have paid off your previous RRSP loan, or have the ability to take on another one), then there is no law that states you have to wait until February to get an RRSP loan. The reason this might be of interest is if you believe that you can take advantage of "dips" in the market (kinda like the "dip" we’re having now!). If the market goes up between now and the RRSP deadline, it would be to your advantage to get your loan NOW as your cost base will be lower.
Unfortunately, hindsight is 20/20 and it is a very real possibility that the market can continue to go down until that time, in which case it WOULD be better to wait until the deadline since your cost would be even lower still.
PARK YOUR RRSP CONTRIBUTION UNTIL LATER
And to go in the other extreme, what if the market kept going down until July? Well, again, if you are being a speculator then you should know that there also is no law that says than when you take out an RRSP loan, the proceeds have to be "fully invested" in the market either. In this case, you would take out your RRSP loan, put the proceeds into an investment savings account or money market fund inside your RRSP and then wait to convert those funds into investments that match your long term asset allocation whenever you feel appropriate.
These strategies are only of interest to you if you think you can time the market successfully (and you have the inclination to try your hand at it) – plus strategies such as these are normally reserved for "speculative" investors which means that in exchange for the potential of a better return you are exposing yourself to a LOT more risk. History has shown that constantly trying to time the bottom of a market to invest and trying to time the top of a market to sell is almost futile. Having said that, I personally invest regularly and double down on the dips when they present themselves. If the market kept on going down, I would keep on buying. Mind you, I’m *relatively* young and my risk tolerance is very high.
Remember: If your risk tolerance is not very high, history has also shown that you’ll do just fine by just investing regularly! Over long periods of time the graph always goes "up and to the right". :)
(The link takes you to www.andexcharts.com – you can buy a copy of their graphs from their website if you like. )