Make the most of this wealth-creation tool all year
Many investors only think about their Registered Retirement Savings Plan (RRSP) in February. But that’s really just a conditioned reflex, spurred on by financial institutions to get you to give them money in the first 60 days of each year. Any contribution made within those 60 days can be applied to the previous year and is deductible from your previous year’s income. That’s all well and good, but your RRSP really needs more attention than a panicky annual deposit just before the deadline.
Three basic RRSP maturity options
Unlike a Tax-Free Savings Account (TFSA), a Registered Retirement Savings Plan (RRSP) does not last forever. In fact, it has a specific date by which you must collapse the plan and choose one of three main options for what to do with the proceeds. Here’s a look at how this works. READ MORE
Key investment principles
This year, the RRSP contribution deadline for getting a 2018 tax deduction is March 1. You still have four weeks to make a contribution, and that’s plenty of time to discuss the best strategy with your financial advisor. To make sure you get the most benefit from your RRSP, there are six key rules that apply all the time, and that I advise my clients follow. READ MORE
Still the most effective retirement savings plan there is
The Registered Retirement Savings Plan (RRSP) is still the most effective retirement saving and tax deferral vehicle available to Canadians. Because it’s such a powerful savings tool, it makes sense for everyone to open a plan a contribute to it regularly. This year, the deadline for RRSP contributions that will be eligible for a 2017 tax deduction is March 1, 2018. READ MORE
Don’t wait until the last day of February!
Typically, you’ll get the RRSP contribution song and dance starting somewhere in January and lasting until the end of February. It’s really just a marketing push by financial institutions to scare you into giving them money in the first 60 days of each year. But that’s no way to do any serious RRSP planning. The better way is to start thinking about your RRSP contribution right now. You have lots of time to weigh the pros and cons, consult with your financial planner, and come up with some cash to contribute. Here’s what to do. READ MORE
Is an annuity right for you?
As a growing number of Baby Boomers retire, the question of what to do with maturing Registered Retirement Savings Plans is becoming more pressing. RRSPs must be shut down by the end of the year in which you turn 69, and the proceeds either taken into income in a lump sum, rolled over into Registered Retirement Income Fund (RRIF), or used to purchase an annuity. Often, retirees will opt for some combination of these. While RRIFs are reasonably well understood, annuities are still a bit of a mystery for many. READ MORE
Proper asset diversification is key to long-term investment success
With recent stock market uncertainty and fluctuating bond yields, many investors are wondering whether the tried-and-true principles for stock and bond allocations in an RRSP portfolio still hold. For example, bond funds, like the iShares Universe Bond Index ETF (TSX: XBB), are believed to have lower volatility ratings than stock funds, yet bond prices have recently fallen as yields have risen. And the solid returns from equity funds like the iShares Core S&P/TSX Capped Composite Index ETF (TSX: XIC) over the past couple of years have recently begun to flag. What’s an RRSP investor to do? READ MORE
How much you can contribute, what you can invest in
Among the most common questions financial advisors are asked at this time of the year are, “How much can I contribute to an RRSP?” and “What can I invest in?” Registered Retirement Savings Plans are still the best individual tax deferral vehicle available for retirement savings, so it makes sense to review the contribution limits and qualified investments. READ MORE
You must act by Dec. 31!
If you turned 71 this year, and you still have an RRSP, you have until Dec. 31 this year to convert it into another type of tax-sheltered plan. If you don’t, the Canada Revenue Agency can take away up to half of whatever is in your RRSP. Here’s what you absolutely need to know about RRSP maturity options. READ MORE
Caution: CDIC covers cash deposits and not much else
The term “Registered Retirement Savings Plan” conjures up all sorts of visions of guarantees and “official” protection against loss. After all, it’s “registered,” isn’t it? Actually, investments held in your RRSP are no more or less protected or insured against bank defaults or swings in the market than any other kind of investment. READ MORE