Few reminders for this RRSP season
Anna Knight, CFP
Financial Planner / Speaker / Author / Focused on helping Canadians navigate their Pensions and Severances
Once again RRSP season is upon us. Remember the deadline for contributions is March 1st, 2016. Here are few points to consider:
1. For every $1 invested in an RRSP, you are making between 26-43% of instant return. Depending on your income bracket, every dollar you add into an RRSP creates a tax deduction. At the income of over $90,563, you are in a 43% Marginal Tax rate. That means that every dollar you invest into your RRSP will return you 43% in form of reduced income tax. If you already paid that amount, you will get that amount back in a form of a tax refund.
As an example, for a $20,000 contribution, you will get a $8,600 tax benefit. If you ask me, that is a great return on my money. So, don't miss the deadline.
The maximum RRSP contribution for 2015 Tax year is $24,930.
2. Always think time frame, not return. Twenty per cent is better than 8 per cent, right? Believe it or not, return isn’t everything. You want to invest based on what you’re trying to achieve, not the rate of return. My investment philosophy that has been tested and proven is that the most efficient way to build wealth is through ownership of great businesses partnered with an appropriate weighting into investment vehicles that provide predictable and
3. If you can but haven't already, join your company’s matching program but also ensure that it's invested properly. If someone were to approach you and say, “Here’s 50 bucks,” you’d be a fool not to take it, right? So it’s amazing that many money-savvy employees forgo signing up for their employer’s pension and registered retirement savings plan (RRSP) programs that match contributions, often up to 50 per cent. So if you have not done it yet, contact your HR today and enroll in your company's plan. It is honesty like
Bottom line, RRSP season is a perfect time to review your overall financial strategy, your game plan and your portfolio. If you need any assistance, feel free to contact me directly at 416-621-6299 ext. 252 and Happy Savings!!!