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What can I do if I suddenly need more money?

What can I do if I suddenly need more money?

If you find yourself in a tight financial position don't despair — there are a number of steps you can take to help get you through this rough spot. Here's a look at each.

Tap into your savings. Savings accounts are easily accessible and have no tax consequence. You may be limited, however, by the amount that you have in savings.

Withdraw from your Tax-Free Savings Account (TFSA). TFSAs are easily accessible. You can withdraw money at any time, tax-free, and re-contribute the withdrawn amount the following year or later.

Take out a personal loan or line of credit. Depending on your situation, you may be able to borrow at an attractive interest rate, especially if the loan is secured by your home or some other asset. Of course, borrowing means taking on interest payments until the loan is repaid. In addition, unless you already have a line of credit in place, the application process could take days or weeks

Sell some or all of your non-registered investments (stocks, bonds, mutual funds). You can sell stocks on the exchange where they trade and bonds on the bond market. Mutual funds can usually be redeemed within 24 to 48 hours. Be careful, however, if the asset you're selling has appreciated in value since you purchased. In that case, the sale will trigger a capital gain, half of which is taxable. In addition, certain mutual funds may have redemption charges, depending on how they were purchased.

Use the equity in your home. There are a number of ways to tap into the equity you've built up in your home, including:

Selling (and the capital gain is tax-free if the home was your principal residence);
Taking out a loan or line of credit with the home as security;
Refinancing, to increase the size of your existing mortgage; and
Getting a reverse mortgage (if you're 60 or older).

Withdraw from your RSP or RIF. Your Registered Retirement Savings Plan (RSP) or Registered Income Fund (RIF) plan should be your last resort if you need cash. Withdrawals are fully taxable at your marginal rate. In addition, all RIF withdrawals that exceed your minimum required withdrawal for the year and all RSP withdrawals are subject to a withholding tax.

If you're facing a cash-flow crunch, a BMO Financial Planner, Investment & Retirement Planning* can help you consider all your options and make the decisions that are right for you and your family.

Bieng Able To Withdraw Money Easily

Source: https://www.bmo.com/home/personal/banking/investments/retirement-savings/retirement-planning/what-stage-are-you-in/living-in-retirement/need-more-money

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