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1. Start investing in an RRSP early, and put time to work for you. Consider a 20 year old who invests $2,500 each year for 15 years, until she turns 35, in an investment with a compound rate of return of 5%. If at the age of 35 she then keeps her money invested, but makes no further annual contributions she will have over $267,000 dollars saved by the time she retires at age 65. Compare that to an investor who starts investing later in life, at age 35, and contributes $2,500 each year for 30 years. By age 65, this investor will have accumulated just over $166,000 in retirement savings. So make sure you start saving for retirement early in life – but remember – it’s never too late to start. 2. Contribute early in the year to maximize growth. You can contribute to your RRSP from January 1 of any calendar year until 60 days into the following year. If you have the money, make your contribution for the year as early as possible instead of waiting until the 60th day of the following year. Your plan will benefit from up to 14 extra months of tax-deferred compounded growth for every contribution.
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Top 5 RRSP Tips continued from front page
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3. Pay yourself first. Before you pay your monthly bills and expenses, contribute regularly to your retirement through convenient, automatic withdrawals from your credit union account. With a PreAuthorized Contribution or “PAC� Plan you can contribute as little as $50 weekly, monthly, or semi-annually – whichever is right for you. A PAC Plan lets you take advantage of dollar cost averaging to maximize your growth opportunities and reduce risk. Dollar cost averaging smoothes out the volatility of your fund holdings because you buy more units when prices are lower and fewer when prices are higher.
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4. Add foreign content. Canada is a small player in world markets. In fact, 98% of the world’s investment opportunities lie outside our borders. A geographically diversified portfolio can boost your potential returns and reduce the risk in your portfolio.
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5. Contribute the maximum permitted. This allows you to take full advantage of the tax deduction from contributions and ensures that you‘re putting enough aside for a comfortable retirement. Call your credit union today and make an appointment to see a Credential Asset Management Inc. Mutual Funds Investment Specialist to discuss your RRSP options. This article is courtesy of Credential Asset Management Inc., your credit union’s partner in providing you with wealth management services. Mutual funds are offered through Credential Asset Management Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Unless otherwise stated, mutual fund securities and cash balances are not insured nor guaranteed, their values change frequently and past performance may not be repeated. The information contained in this newsletter is provided as a general source of information and should not be considered personal tax advice, investment advice or solicitation to buy or sell any mutual funds. ŽCredential is a registered mark owned by Credential Financial Inc. and is used under licence.
INSURANCE REMINDER Please be aware that all members with mortgages or chattel secured loans must maintain physical damage insurance coverage to full insurance value of the security. Loss payable must be to G&F Financial Group.
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