What is an RRSP?
July 19, 2017
A Registered Retirement Savings Plan is a great benefit to offer your employees.
Get to know the basics as you read below:
Definition of 'Registered Retirement Savings Plan - RRSP'
A legal trust registered with the Canada Revenue Agency and used to save for retirement. RRSP contributions are tax deductible and taxes are deferred until the money is withdrawn. An RRSP can contain stocks, bonds, mutual funds, GICs, contracts and even mortgage-backed equity. Source: Investopedia
What’s the best way to invest in my RRSP: Should I buy stocks, mutual funds or ETFs?
It all comes down to what kind of investor you are. If you are disciplined, informed and willing to put in the time, you can do very well by buying individual stocks. However, you need to stick to a proven strategy, such as value investing, and you should buy for the long run. Studies show that most stock pickers trade too often, and can get sucked into hot sectors, so they’re always buying high and selling low.
Mutual funds are the most popular way to invest for retirement, and they are a good choice if you’re just starting out. But you should stick to an asset allocation that works for you, and keep your fees low. Go to moneysense.ca/mutualfunds for a list of good bets.
Investing in index funds or exchange-traded funds (ETFs) is a great way to invest for both beginners and the more experienced. Our Couch Potato Portfolio of ETFs can give you many of the benefits of mutual funds at a much lower cost, which means a higher return over the long run. Go to moneysense.ca/bestetfs to start building your ETF portfolio. Source: TodaysParent
RRSPs matter – even if you have a pension
Other than top-end public sector pensions, few plans are designed to provide all of the retirement income you’ll need, so saving on your own through an RRSP can be essential. For example, let’s assume your workplace pension plan provides 40 per cent of your needed retirement income of $45,000, with government programs such as the Canada/Quebec Pension Plan and Old Age Security providing 30 per cent. That still leaves you to come up with the remaining 30 per cent. That’s where saving through your RRSP can be so important.
Source: TheStar
Processing group benefits for your employees without the know-how is complicated and time-consuming. Lessen the time and money that you need to invest throughout the process by allowing us to help you out. Contact us!
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These articles are not intended to dispense legal advice and should not be taken as such. You are advised to obtain legal counsel if required to address areas of concern this article may have raised. The goal of these articles has been to draw your attention to an aspect of your business which may currently be neglected.
