The RRSP Contribution Deadline is Coming Up on Feb 29th
What does it mean for you, and how can you maximize your savings & investments?
RRSPs are a highly misunderstood investment tool in the financial world. Like any investment vehicle and strategy, there are pros and cons, but for the majority of people, they’re essential for strong retirement planning and saving.
If you’re contributing to your RRSPs this year, be aware of common misconceptions and follow these tips and tricks to maximize your RRSP strategy:
“Don’t bother with RRSPs. They don’t make any money.”
An RRSP is simply an account for investments. If an RRSP isn’t performing well, it’s actually the investment within it that isn’t performing well. Many people aren’t advised about the tax treatment of contributions and any subsequent withdrawals. Be sure to review all of your investments (RRSPs and otherwise) with your advisor on an annual basis.
“I don’t need RRSPs.”
According to StatCan, only 37.1% of paid workers were covered by a registered pension plan in 2017. That means over 60% of the population has to rely on minimal government benefits and their own savings and investments in retirement. If you don’t have RRSPs, you may be looking at extended years of work and a very tight annual budget in your old age (especially if you own a business).
“I only contribute when I have extra cash.”
Strong financial planning is as much about mindset as it is about resources. The best strategy for wealth-building is to set up regular, automatic contributions to your RRSPs and other investment accounts as soon as you’re earning an income. Another tried and true tip: put the tax refund you gain from your RRSP contribution back into your RRSPs or TFSA (Tax-Free Savings Account) right away to eliminate the temptation to spend it.
“My former financial advisor told me I’d make a ton of money on my RRSPs.”
If you’ve been over-promised and under-delivered when it comes to RRSPs, we get it. RRSPs are meant to be long-term savings and investment accounts, not rapid-fire investments you can cash out on within a few years. Talk to a financial advisor who communicates in a balanced manner with regard to risk and return. He or she should be able to educate you fully about the pros and cons of any strategy. There are many options with your investments, so it’s important to ensure your financial advisor has the proper credentials, as well as access to multiple strategies (i.e. stocks, private/alternative investments, ETFs, managed portfolios) for your RRSPs.
Book Your Free RRSP Consultation
What do the next five years look like for your family? What about the next ten? Twenty?
Life throws you many twists and turns, so it’s important to have a dynamic, long-term financial plan that you revisit with a financial professional on a regular basis.
Register for your free RRSP by contacting us.