An RRSP is one of the few tax shelters available to Canadians. The benefits from investing in an RRSP can be substantial.

Your money works harder in an RRSP

Suppose you invest $5,000 annually in an RRSP and earn an 8% annual return. After 25 years, your RRSP will grow to $394,772. With a non-RRSP account, assuming a 46% tax bracket, you’d have only $122,488. The RRSP yields $272,000 more! Even if you cash out after 25 years and pay 46% tax on the RRSP’s value, you’d still be ahead by $90,600.

Why does your money work so much harder in an RRSP? First, your contributions are tax-deductible. In a 46% tax bracket, your $5,000 RRSP contribution is equivalent to saving just $2,700 after tax. Second, your money grows tax deferred. Outside of an RRSP, an 8% return when fully taxed is cut down to just over 4%.

Concerned about saving enough for retirement? Make RRSPs the foundation of your savings program. Please don't hesitate to contact me to make your RRSP contribution, or to discuss how we can help you achieve your retirement goals.

Melina Frenna, FMA
Investment Advisor
(450)466-2752