‘Tis the season for investing! Or so everyone seems to be saying. But what happens when the thought of investing hasn’t crossed your mind for longer than a few seconds and you have no idea where to start?
An RRSP (registered retirement savings plan) is an account that holds savings and investment assets. And though you may think you’re too young to open a retirement account, the sooner you do it, the better off you will be in the long run. Contributing to an RRSP account reduces your taxable income, and any income earned on the money invested is not taxed while within the plan or on withdrawal.
With RRSP season just around the corner, we’ve got some handy tips for all you first-time investors. Don’t worry — you can thank us later!
Start early
What are you waiting for? The sooner you start investing in your RRSP, the more money you will have when you retire. The key to a large investment is growth, and the only way it will grow is through years in the bank. TD Direct Investing offers both new and experienced investors the TD retirement savings calculator, which allows you to see how much will be available to you at your retirement. By playing around with different numbers, it’ll help you to get a better understanding of how much you need to invest to meet your retirement goals.
How much do I invest?
The amount you invest has a lot to do with your current and future spending habits. If you can’t afford to put much into your account now, then start small, and increase your contributions as your financial situation eases up. By using online tools (such as the one we just mentioned), you can calculate how much of your income you can actually afford to put into RRSP saving accounts.
When should I invest?
Most people think February is the only time to contribute to their RRSP, but that’s not necessarily true. It’s easier to invest in smaller doses than to scramble to find a large sum of money to put into your account come February. Talking to a financial advisor about setting up a system that directly contributes from your bank account on the day you’re paid is a great way to make sure money is constantly being put into your account.
Consolidate your assets into one company
Many people have their assets dispersed among multiple financial service companies. This, however, isn’t doing them any favours. By consolidating your assets into one company, you’ll get better financial advice from advisors, which can help in earning you more money for your retirement.
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