When is the Best Time to Open an RRSP?

You may be getting frustrated with the advertisements that most financial institutions do in the beginning of the year. They request you to invest in RRSP (Registered retired savings plan). Actually this time span is often described as RRSP season. If you invest in RRSP within very first two month (60 days) of the beginning of the year can be easily deducted from your income of the last year offering faster tax refund.

In case you have enough cash with you to invest in RRSP then this is the time to utilize it properly. Here the article will illustrate more about this concept.

Do you need to reach the bank immediately? Of course – No!

In case your boss is giving you the chance to invest in RRSP or VRSP (voluntary retirement saving plan) in say Quebec or anywhere in Canada then think about it seriously as an option to replace investing in an individual RRSP at credit union or bank. You may want to know why? The reason are many and one of the basic reason is simple because you can easily save hundreds and hundreds of dollars taken against management fees over your career span which is quite convincing. Since the management fees are deducted from some published returns it may seem to you as if they don’t exist. But the fee is always there.

A mutual fund management fee embedded within any individual RRSP vary and it can fall in between 2-3%. In case Group RRSP is managed by a particular insurance company the management fee would be anywhere between 0.5-1.5% which is less and it can directly have a positive effect on the savings.

Post holiday season- Is it the best time to contribute to RRSP?

Not many people own a substantial amount of dollars in their bank accounts to contribute to RRSP in month of January/February. So, does that mean that this is a RRSP season and you can contribute effectively to save for your retirement? Of course no.

Smaller but frequent RRSP contribution

In order to have sturdy savings plan to save sufficient amount for the retirement you need to have a regular RRSP contribution time period. This way the budget is simplified. It is pretty easy to invest $50 fortnightly as compared to contributing around $1300 at the end of the year.

It is always better to save during the period when the money is deducted from your salary directly prior to getting deposited in the bank account. This is an amazing benefit of group VRSPs and RRSPs.

Should I make RRSP contributions bit early?

Yes. There are many reasons for this. When it comes to markets in North America, end of month September is considered as the season of strength. You can make contributions at the start season of strength instead of during RRSP season which is end of the year.

It is better to make contributions early September rather than waiting for RRSP deadline. It is one of the best strategies that work.

How to pay no income tax?

If you are contributing to Group RRSP via payroll deductions, you directly get a tax refund instead of when you actually file your income tax returns. Hence if you pay $50 at ever pay. $50 will get credited in RRSP group but the net pay will be deducted by around $30. So, you end up saving $20 in income tax.

You can gain a lot by saving on tax instantly on every pay rather than getting just a single refund at once. This can give you thousands of dollars extra and there is no waiting for the entire year to receive your funds.

Can I get higher returns?

Yes, you can get higher returns by distributing you RRSP all throughout the year and it is because of income tax saving system that you get good returns. When you make RRSP contribution with each pay the amount is invested instantly on different markets and it automatically generate returns.

In case you wish to go all the way till the end of the year and contribute a similar amount to the amount of your contributions for each pay there will be no return generated throughout the year. Contributing with each pay can convert into thousands of dollars extra for your retirement based on the bond market and stock performance.

Can I get benefited from HBP along with group plan?

Group RRSP members can get benefited from HBP plan (Home buyers plan) to make most of real estate market easily.


Start focussing on your RRSP contribution planning and try to give importance to RRSP contributions to gain maximum benefits. You can gain a lot through RRSP.

It is important to consider the contribution amount. In order to do it you need to evaluate your budget, analyze current savings and determine your future income and the retirement needs. You can also you various tools available to help you carry out the entire process.

Many people think whether contributing to RRSP is an ideal choice, of course it as it makes sense too. Just ensure that it suits your future goals and income. Of course if you need to build a savings plan that helps you with your retirement goal so that you can enjoy a similar lifestyle that you are enjoying today.

If you have low income then you will not be able to get the benefits in tax deduction from RRSP contributions. You need to assess the situations that favour RRSP and accordingly need to make RRSP contributions. Of course you need to plan your retirement well and for that you need to evaluate your income, what are you expecting post retirement etc. You need to keep a check on your RRSP after making the contributions. You can also hire financial consultant to guide you on properly making RRSP contributions and whether or not they are profitable for your income and retirement goals. It will help you in the long run and avoid making incorrect decisions. Any help for financial problems contact gtacredit.com or call 416 650 1100


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