A Registered Retirement Savings Plan (RRSP) is an excellent solution that can help you plan for retirement, purchase your first home or fund your continued education. Here are a few things to consider when contributing to an RRSP:
Confirm your RRSP contribution limit
You can contribute up to 18% of your earned income to a maximum of $25,370 in the 2016 tax year (minus pension adjustments from your company pension plan) and unused RRSP contributions that are carried forward each year. Your current contribution limit is included in your Notice of Assessment from the CRA.
Explore your investment options
An RRSP can hold a variety of investments, from stocks to bonds, mutual funds and ETFs. A diversified portfolio should include a variety of assets to help mitigate risk and maximize return potential.
Avoid waiting to March 1, 2017, which is the final day you can contribute to an RRSP. One of the benefits of an RRSP is that your investments are allowed to compound tax-deferred, meaning there are significant advantages to investing on a regular basis. Consider a pre-authorized chequing plan that spreads your contributions over time and potentially gives you greater long-term returns.
Speak to a financial advisor
Unsure of what is the best option for you? A financial advisor can recommend investments to help your RRSP grow with your needs and reflect your risk tolerance.
An RRSP gives Canadians a significant opportunity to save. For more information about RRSPs, please visit mackenzieinvestments.com/rrsp.
The deadline for contributing to your RRSP is Wednesday, March 1, 2017