Why use an RRSP?

When you contribute to an RRSP you can claim the deposits, within certain limits, to reduce your taxable income when filing income tax returns. Taxes on the investment income earned in the plan are postponed as well. You don't have to pay the income taxes until you withdraw your income, usually following retirement. The basic reason for this tax provision is to encourage people to save for their retirement. When you retire you draw an income through a RRIF or Annuity and only pay tax on the income you draw each year

Why you need to contribute to your RRSP every year?

With the volatile markets of the past couple of years, some investors may be hesitant about contributing to their Registered Retirement Savings Plan (RRSP) this year. Others may be tempted to "skip a year" or wait until markets stabilize. However, given the benefits of an RRSP, this is a potentially costly mistake - now and down the road. Here are just a few reasons why you should consider contributing to your RRSP every year.

• Save on taxes: When you make an RRSP contribution, you receive a tax deduction for the previous taxation year.
• Compounding growth: You also benefit from tax-deferred compound growth within the plan. Missing a single $3,000 contribution will reduce the size of your nest egg by more than $20,000 over a 25- year time frame (assuming an average annual return of 8%). Even simply delaying your $3,000 contribution for a year will cost more than $1,500 in lost growth over 25 years.

No cash for your RRSP? No problem!

I can help you maximize your RRSP contribution with RRSP loans through Solutions Banking^TM products provided by the National Bank of Canada .