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Don’t wait until the deadline to contribute to your RRSP

The registered retirement savings plan (RRSP) deadline is just one of those things that creeps up on most Canadians. Instead of waiting until the beginning of March to make your lump sum contribution, you can start making the most of your savings today.

Consider these three tips to get started:

1. Build a plan
Almost every successful undertaking starts with a plan – and investing in your RRSP is no different. Take some time to think about your RRSP and your finances – your contribution limit, where you are currently allocating the money in your budget, and how much you have to contribute.
Having a plan ensures you do not wait until March 3rd to strategically map out how you will contribute to make the most of your investments.

2. Set up a pre-authorized contribution
A pre-authorized contribution (PAC) is a great way to contribute to your RRSP on a regular basis. You can decide on the frequency (bi-weekly, monthly, etc.), the amount (with as little as $50 each time), and have this amount automatically withdrawn from your bank account on pre-assigned days. It’s as simple as that!
By investing regularly, you don’t have to worry about funding that large, lump sum amount each year or buying an investment at a potentially high price. You also benefit from the compounding and/or potential growth that can occur over the full year, which you won’t benefit from if you invest at the RRSP contribution deadline.
Another great advantage of a regular contribution plan is that you benefit from dollar-cost averaging (DCA). DCA is the technique of buying a fixed dollar amount of a particular investment on a regular basis, regardless of the investment’s share price. More shares are purchased when prices are low, and fewer shares are bought when prices are high.  The idea is that, over time, you pay less for the investment on average.
Here’s an example of dollar-cost averaging in action:

3. Speak to us
Your best move is to discuss your investment plan with your Advisor, and to make sure your investments reflect your overall investor profile. Are you looking to buy your first house in the next few years and need to access the money in your RRSP? Do you need to protect your money because you are close to retirement? Are you in a position in which you are looking for growth from your investments (and are willing to accept a bit more risk)? Your Advisor will make sure your money is invested based on your individual short- and long-term financial needs, as well as your unique investor profile.

Contact us to discuss your RRSP and how you can benefit from a pre-authorized contribution plan.

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