Investing 101

Your 2010 RRSP checklist

RRSPs are an essential part of any investment portfolio. And the Mackenzie Tax & Estate team constantly updates investors and their advisors about any changes in the rules and regulations surrounding RRSPs.
With the March 1, 2011 deadline looming, they point out that if you make an RRSP contribution in your high-income years, you can claim a higher tax deduction. They also note that you can contribute up to $22,000 in 2010 and that borrowing to make a RRSP contribution may be an effective strategy to consider, because it can grow inside your RRSP on a tax-deferred basis. You may also want to invest your income tax refund in your RRSP, or you can use your income tax refund to pay down your RRSP loan early.
Here are ten things to consider when investing in an RRSP:

  • If you haven’t started saving, start now. It’s never too late to invest in your future.
  • Invest early and often to take advantage of the “time value of money.” Investing today will let you reap more tomorrow. Because your investments are allowed to compound tax-free, there are significant advantages to investing on a monthly basis rather than at the end of the year.
  • Choose mutual funds and put your money in the hands of professionals who have the investment know-how to help you reach your retirement dreams.
  • Maximize your RRSP contribution to take advantage of your single greatest opportunity to save for retirement and defer taxes.
  • Don’t be too cautious and choose low-risk investments only. A diversified portfolio should include a variety of assets to minimize risk and maximize return.
  • Think long-term instead of letting short-term market volatility sway your investment decisions.
  • Take advantage of dollar-cost averaging with a pre-authorized chequing plan that spreads your mutual fund purchases over time and gives you greater long-term returns.
  • Consider an RRSP loan and visit mackenziefinancial.com/calculators and use our helpful retirement planning tools to determine your savings needs.
  • If you don’t have the cash available, consider moving non-registered investments to your RRSP in kind.
  • 10 Don’t wait until the last minute to meet the March deadline – investment decisions shouldn’t be rushed.