January 25th 2017 - Amanda Perkins
With the deadline for your 2016 RRSP contribution around the corner (March 1st 2017), this is a great time to remind you of the benefits of contributing money into your RRSP each year! There are many misconceptions about what an RRSP is, and who should and should not have one.
Let’s start by defining an RRSP – An RRSP is a government approved plan that encourages people to save for their own retirement years. Your contributions are tax deductible and that plan’s earnings are tax-sheltered.
Below are 4 of our best tips on contributing and investing in an RRSP:
#1 – Be aware of deadlines!
Take advantage of the fact that even though you did not contribute to an RRSP all year, you have until March 1st 2017 to contribute for the 2016 tax year. Don’t wait until the last second to make the transfer, contact us to set up an automatic transfer year-round or make one deposit today.
#2 – Set up automatic transfers
If you like the idea of saving for your future retirement in more of an “out of sight, out of mind” way, setting up an automatic transfer into an RRSP is a very easy way of making contributions and watching your investment grow. It’s easy to set up! Transfer amounts can be changed at any time and this way you have already planned for your future without even feeling the gouge of a large lump sum deposit. It can be set up to transfer on the same day as your pay or monthly.
#3 – Take advantage of our RRSP Line of Credits
If you worry about the fact that you have not set up automatic transfers and you do not have a lump sum to deposit before the deadline, consider starting an RSP line of credit. Once you apply, the funds are available to you every year to recontribute the following year. No need to reapply the following year. You make bi-weekly or monthly payments back towards the line of credit and still get the tax break!
#4 – Important to start young
The younger you can start thinking about your retirement, the more you will have saved and the more your investment will grow. Time is your friend as you earn more interest and your RRSP continues to grow. No amount is too small, even starting with a small amount is better than nothing at all.
Not sure if RRSP’s are for you? Talk to our certified Financial Planner and discuss RRSP’s as well as other tax saving investment options!