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Svetlana Mishina view profile
Toronto, Canada
Bio: Throughout my working career I`ve built my investment portfolio, believing how important it is to have savings and not just rely on a pay cheque. My vision is to create partnerships with women, who want to be proactive and take charge of their financial future. Our relationships will be built on trust, respect and transparency, focused on meeting the needs for security and maximizing income potential.
www.mishinafinancial.com

More Articles
by Svetlana Mishina

Do You or a Family Member Qualify for the RDSP?


Many Canadians have not yet taken advantage of its benefits, which can help disabled individuals provide a better future for themselves and their families
 
 
 
 

The Pros and Cons of RRSPs vs. TFSAs


A quick summary of the benefits and considerations of each option
 
 
 
 

RRSP Strategies for Your 20s, 30s, 40s, 50s & 60s


Some key strategies to keep in mind at various stages in your life
 
 
 
 


Getting the Most Out of Your RRSP

A Registered Retirement Savings Plan (RRSP) is a savings account that has unique tax-deferral characteristics. The tax structure allows you to defer paying income tax on your RRSP deposits and earnings until the money is withdrawn. Many people have a higher tax rate during their working years than during their retirement years. This often results in overall tax savings.

RRSP can be an integral part of your overall financial strategy. But how can you ensure you're getting the most out of your RRSPs? 

While there is no one-size-fits-all solution when trying to determine how to get the most out of your RRSP, it's important to work with a financial advisor to determine what makes sense for your specific situation.


Below are a few ideas you can consider in your discussions with your financial advisor:

      Start early. Time is one of your greatest assets, so take advantage of it. The longer you save, the more opportunity you have for your investments to grow.

      Contribute regularly. Set up a plan to invest according to your specific situation. It can help make contributing less stressful. 

      Give your RRSP an annual raise. As you progress in your career and income, make sure you increase your contribution amount to your RRSP (as long as you're within your limit). The more money you save, the more funds you will have at retirement.

      Reinvest your tax refund into your RRSP or TFSA (Tax-Free Savings Account) rather than make a large purchase. It could be a good time to re-evaluate some of your larger purchases.

      Take advantage of employer contributions. There are a few investment options that can compare with the value of your employer's match, and the role it can have on your retirement strategy. Even if your ability to save may be modest, you should take advantage of the full employer match, if available.

The following example illustrates how you can benefit contributing into your RRSP earlier in the year rather than later:

$5,000 Annual Contribution Made on January 2 vs. December 31

Total Years Investing

Early Contribution (Jan. 2)

Late Contribution (Dec. 31)

Benefit of Contributing Early

15

$123,362

$116,380

$6,982

25

$290,781

$274,323

$16,458

35

$590,604

$557,174

$33,430

Ultimately, there is no simple answer to the question of how to get the most out of your RRSP. Each investor's situation differs, and what may work for one investor might not make the most sense for you and your financial goals. 

Speak with a financial advisor to understand the importance of an RRSP and the role it may play in your long-term financial strategy.

[Image Credit: Marcin Czaja / StockSnap]


Posted on February 1, 2016 in Money Making by Svetlana Mishina

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