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RRSPs right for everyone?

Advice on Registered Retirement Savings Plan

Q. I am in my late 20s. I have never contributed to a Registered Retirement Savings Plan. This past December, I received a large bonus. I was advised to move all of it into a RRSP. Can I, or better yet, should I?
– Graham

A. ’Tis the season for RRSPs. You cannot escape the media hype that overwhelms our radio waves, television screens and billboards with ads and promotions that encourage individuals to buy RRSPs. Is this a bad thing?

Not necessarily so! Some individuals need the persuasion, encouragement, or motivation to save for their retirement.

This year will be more challenging than the past for financial institutions to get your RRSP dollar. Many RRSP holders have sat helplessly as their retirement nest continues a downward trajectory.

Regular contributors should focus not on “if” they should buy RRSPs but the type of investments they hold. Not many investors have experienced several years of a no-growth stock market. Diversification maybe key in this market.

Before contributing, determine if this money is for retirement or use in a year or two. The new Tax Free Savings account (TFSA) may suffice. Contact you financial adviser and get some feedback.

– Reach Henry Choo Chong, CGA, at choochonghcga@yahoo.ca or 416-489-7800, ext. 227.

 
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