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Sam will retire in 10 years, and has 4,000 of income available to invest towards his retirement. He has 2 options: i) Pay tax on
Sam will retire in 10 years, and has 4,000 of income available to invest towards his retirement. He has 2 options: i) Pay tax on his income and invest the rest in a taxable account. The yearly returns are then treated as regular income and taxable. The rest, including accumulated interests, are reinvested. ii) Obtain a deduction by investing in a RRSP. Taxes on capital and interests are then deferred until retirement. Compare the two options, supposing that his marginal
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