Personal Services - RRSP Investing

What is an RRSP?
A Registered Retirement Savings Plan is a government approved plan through which you save money for your retirement years.  Your contributions, within limits, are tax deductible and the income earned is tax sheltered.

What does an RRSP Mean to you?
You are investing money when you can most afford it – during your peak earnings years – to build up a comfortable retirement fund.  Not only do you invest some money that would otherwise be paid in taxes, but the earnings of your plan are not taxed until you withdraw them.  Since 100% of these earnings can be reinvested and compounded, the growth of your RRSP increases rapidly over the years.  Your retirement savings will also increase significantly if you make each RRSP contribution early in the year.

Who is Eligible to Contribute?
Anyone with “earned income” subject to Canadian taxation, including non residents, may contribute to an RRSP.

What Types of RRSPs are Available?
Two types of individual plans are offered:  Deposit Type Plans and Mutual Funds

Deposit Type Plans
Deposit type RRSPs are the most common plans.  They offer familiar savings options including savings accounts or term deposits.  The rate of interest may be variable, fixed or index-linked.  Key choices include the term of the deposit (ranging from daily to multi-year);  and frequency of interest calculations and payments to the RRSP (daily, monthly, annually or end of term).

Mutual Funds
There are many types of funds available.  Common types are money market funds, income funds and equity funds.  The first is invested in short-term securities such as treasury bills, and government notes.  Income funds have the same investments from time to time, but predominantly invest in longer term bonds and mortgages.  An RRSP eligible equity fund invests primarily in Canadian stocks. 
Since mutual funds investments do and will fluctuate in value, they don’t provide a guaranteed rate of return.  Mutual funds are not covered by deposits insurance.

Because of the wide variety of funds and other considerations, when choosing an RRSP, it is wise to obtain help from Sydenham’s financial advisors.  The selection of a retirement fund depends entirely on your personal situation ( health, present income and tax brackets, cash requirements, desired inflation protection or estate preservation).

Mutual funds are offered through Qtrade Asset Management Inc., member MFDA.