Renovation: TFSA or Loan?

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u/retire-free · Joined Oct 2024

Planning a reno? Compare the impact on your nest egg: should you dip into your TFSA or take a loan? Discover the long-term costs with retirement in mind.

Last update Oct 2024
  • Scenario 1: Use TFSA: Impact on Nest Egg
  • Scenario 2: Take Loan: Impact on Nest Egg
  • Which One Is Higher (%)

Compare how each option affects your finances over time. Check which scenario has a lower impact on your nest egg by examining the total cost and long-term balance. See which option results in greater impact on your retirement plan.

# Years from Now

Try your numbers:

Enter the total cost of your renovation. This amount will determine how much you need to finance, whether by TFSA or loan.

A =

Enter the annual interest rate for the loan. This rate affects your monthly payments and the total cost of borrowing over time.

B =

Specify the repayment period in years. A longer term lowers monthly payments but increases total interest paid.

C =
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  • Amount
    Any single amount ($).
  • Cash Flow
    Rent, insurance premium, salary, ...
  • Current Asset
    Real estate, commodity, bonds, ...
  • Installment Loan
    Mortgage, car loan, ...
  • Percentage
    Any percentage value (%).
  • Years / Months
    Any time horizon.
  • Age
    Show "Age" instead of "# Years from Now."
  • Retirement Age (requires Age)
    Enable "Investment Return After Retirement."

Time Value Assumptions

Heads Up!

If you're using Cost Basis (cb) for calculating capital gains:

Please be aware that very few countries currently use inflation-indexed cost basis. Double-check your local tax rules before publishing.

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How is Cash Value calculated?

The TFSA cost reflects the opportunity cost of lost growth, based on the market return rate you specified, had the funds remained invested tax-free in your account.

Decisions / Expectations

(Expressions are evaluated at Year 0 only.)

D̃ =

Calculations

(Expressions are evaluated at every year.)

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Add Decision or Expectation
  • Buy Asset
    Buy an asset growing at its own rate.
  • Take Installment Loan
    Take a mortgage, loan, etc.
  • Invest
    Receive/Spend a lump sum.
  • Expect to Invest
    Expect to receive/spend a lump sum.
  • Expect Monthly Cash Flow
    Expect to receive/spend cash monthly.
  • Expect Yearly Cash Flow
    Expect to receive/spend cash yearly.
  • Define Variable (Numerical)
    Calculate an intermediate value.
Add Intermediate Calculation
  • Define Variable (Numerical)
    Calculate an intermediate value.
  • Define Variable (Cash Flow)
    Calculate a combined cash flow.