RRSP season has just ended. Were you thinking of contributing to an RRSP to reduce your income tax for 2015? I hate to break the bad news but it is too late now. You had to do it before midnight on 29 February. You will have to wait until next year to get these tax savings.
I’m not familiar with your situation, but, for my part, I waited until the last minute this year before making a contribution to my RRSP. I know what you’re thinking, you can say it, look who’s talking! Why did I wait so long? I don’t know. I was probably being negligent. After all, why bother contributing to an RRSP today when it can be done tomorrow?
There are many solutions for contributing to an RRSP. You can make contributions periodically throughout the year, or even make the contribution in one payment, providing you have enough money to do so.
In all humility, I can confirm that it is much easier to make regular contributions to an RRSP than it is if you choose a one-time investment. It is not a coincidence that the majority of financial institutions offer various periodic savings plans. Regardless of the name given to them, these plans offer more or less the same advantages. Here are a few of them:
Proper budget planning. You set the amount and frequency of your payments depending on your ability to pay.
Pre-authorized payments. The funds are automatically debited from your account and you have nothing else to do. If your money is burning a hole in your pocket, this option is an excellent way to reduce the temptation to splurge.
Immediate tax savings. If your contributions are deducted directly from your pay, you are making immediate tax savings. You will no longer have to wait until you have filed your income tax returns.
The advantage of compounding. With every payment, your money will start working for you. Find out more on the magic of compounding (French only). You’ll find the effects of compounding on your investments absolutely amazing.
So what’s the great news? You still have 12 months to contribute to your RRSP for the 2016 fiscal year. I’ll be taking advantage of 2016 to re-evaluate my strategies with my financial planner. You can bet your bottom dollar that we will be looking into periodic savings. I won’t be had a second year in a row!
I suggest you do the same because RRSP time is right now and always!
