Tuesday, January 15, 2013

Let this be the last year you stress about RRSP contributions!

Now that the holidays have been and gone, many Canadians are turning their attention to the upcoming RRSP season. March 1st is the deadline to contribute to your RRSP and have it reduce your 2012 taxable income. For many, this can be a very stressful time of the year as some of us scramble to put together a lump sum contribution to our RRSP. In the attached news story, the Bank of Montreal suggests that making a monthly contribution throughout the year is more manageable than purchasing a lump sum at the beginning of the year. I tend to agree; and believe that an even better strategy is to combine both approaches if possible- contributing monthly as well as setting up a separate savings account to accumulate a lump sum which can be contributed before March 1st. If you haven’t been able to put together a contribution for 2012, an RRSP loan may be the last option for you but there are pros and cons to borrowing money to purchase investments. Any good tax strategy involves pre-planning, a reasonable budget and some sound advice.

In my line of work, I have the pleasure of dealing with some great financial planners and advisors. If you would like some advice on tax planning and investments please drop me a line and I would be happy to refer someone to you!

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