4 Reasons to Invest in an RRSP

By Emmanuel Ramirez

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As the end of the year approaches, we know that after the beautiful holiday season, comes one of the most dreaded times by most Canadians: Taxes. When talking about taxes, one cannot help but to think about RRSP’S (Registered retirement savings plan). If you are someone who does not know about RRSP’s or is debating whether you should invest in them, then this is the article for you! Below are 4 great reasons to start investing!

  1. You get a tax deduction: When you invest money in an RRSP, your taxable income is diminished, and thus the amount of taxes you owed that year are diminished as well. For example, your taxable income is 65,000$. If you invest 5,000$ into an RRSP, your taxable income is then lowered to 60,000$, which ends up translating into about 1,482.50$ in tax savings.
  1. You can get extra government benefits: When lowering your taxable income, this could also help you get other government benefits such as a higher Ontario Child Benefit, higher grants when investing in an RESP, or being eligible to certain tax credits.
  1. You force yourself to invest for your retirement: Investing in an RRSP forces you to keep your money in savings much more than other investment tools (ex. TFSA). The reason for this is that all money in the RRSP is taxable if taken out. Having to pay extra taxes at the end of the year would definitely make you think twice before cashing out some money out of that RRSP.
  1. Helps to buy your first home: Lastly, investing in an RRSP can help accelerate you getting that down payment for your first home thanks to the Home Buyer’s Plan (HBP)! In brief the HBP allows first-time home-buyers (among others; for further details as who else is eligible you may consult the CRA website), to cash out up to 25,000$ from their RRSP’s tax-free for the current year at which they buy their home. The money that has been cashed out can be repaid into the RRSP in a span of 15 years, interest-free, 2 years after the money was cashed-out.

In brief, there are many good reasons to start investing in an RRSP; the ones mentioned above are just 4 of them. As tax season is approaching, it is now the best time to contact a financial advisor who can help you with RRSP investments. Take action fast. Remember, when it comes to investments, the sooner you start the better!

Emmanuel Ramirez, Bsc.
Conseiller en Sécurité Financière/Financial Security Advisor
Industrielle Alliance/Industrial Alliance
Assurance et service financiers Inc.*/
Insurance and Financial Services Inc.*
Agence Hull/Agency
1160 boul. Saint-Joseph
Gatineau (Qc.) J8Z 1T3
819-771-6645, poste/ext 265
C:819 319-3168
1-800-363-8004 poste/ext 265
F:1-877-781-7394
emmanuel.ramirez@agc.inalco.com
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Cabinet de services financiers/*Financial services firm

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