Why You Should Contribute to RRSPs
RRSPs (Registered Retirement Saving Plans) are a fantastic way to save for your retirement and something you should start taking advantage of as soon as you start your adult working life. If you have not already begun to contribute to an RRSP, the best time is now.
There are numerous incentives and advantages to contributing to an RRSP. Many employers offer to match contributions and a certain percentage of contributions made to an RRSP are tax deductible. Keep in mind that only a portion of the RRSP Contribution will reduce the amount of tax owed, and you will not receive the full amount of the RRSP Contribution back as a tax refund.
With proper attention and the right financial management, an RRSP can be an excellent way to grow your wealth for your retirement. Any income earned by your RRSP is also exempt from taxation so long as the funds remain in the plan – though when the funds are withdrawn, they will be taxable.
RRSPs are best utilized for long-term savings as they lose many of their benefits if regular withdrawals are made from them. Therefore, it is important to consider your financial goals when making contributions. Generally, with RRSPs bigger is better, and you will get bigger benefits from bigger contributions. However, even if you can only make smaller contributions you will still be building your savings – just don’t expect massive growth from small contributions.
The single most important factor for growth of your RRSP is time. So first, start contributing as early as you can, and second, contribute as much as you can and are allowed.
If you have further questions about how to best plan for your retirement, please contact Noah Belcher and let us assist you in meeting your financial goals.
Noah Belcher is an Investment Advisor with IA Private Wealth, and is a CERTIFIED FINANCIAL PLANNER® professional and a Chartered Investment Manager (CIM®), who help his clients achieve their financial goals and objectives. He offers personalized solutions and stellar customer service to clients with complex tax profiles who require top-notch advice.
If you have any questions about this article or would like to talk to Mr. Belcher about your financial profile, call his office at (604) 535-3454.
This information has been prepared by Noah Belcher who is an Investment Advisor with IA Private Wealth. Opinions expressed in this article are those of the Investment Advisor only and do not necessarily reflect those of IA Private Wealth. The information contained herein may not apply to all types of investors. IA Private Wealth is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.
