Like many Canadians, you contribute to a Registered Retirement Savings Plan (RRSP) for two reasons: to build a financially comfortable future and to improve your present income tax situation. But, did you know an RRSP loan could increase your income tax deduction and provide you with more money at retirement?

Is an RRSP loan for you?

There are often other financial demands that can make contributing to an RRSP seem difficult. And it can be hard to practice the discipline of regular RRSP contributions throughout the year. Fortunately, there are options available. An RRSP loan is a simple solution that can help you maximize your retirement contribution and reduce your income taxes.

Some people think RRSP loans are only for those close to retirement who are trying to “catch-up”. In reality, RRSP loans can offer great value for many individuals regardless of their age.

RRSP loans are easy and convenient

RRSP loan programs offered today provide flexibility and convenience at a reasonable cost. Some companies offer a 90-day loan payment deferral option, hopefully giving you enough time to receive your tax refund and possibly pay the loan off entirely. As well, you can make extra payments to your loan at anytime without a fee. What could be easier?

Now it’s your decision

It’s important to invest for your future. Please think about this opportunity and contact us if you have questions or would like to learn more about RRSP planning and borrowing to invest. I hope to hear from you soon. Together we can take care of your financial future.

10 financial New Year’s resolutions

Five moves to get your finances in order for the New Year

Canadians’ choice for New Year’s resolutions: “save money”

Make a financial resolution to start your New Year

Sensing a theme?

There’s no surprise here. “Saving money” follows close behind the perennial champions “lose weight/quit smoking” for New Year’s resolutions by Canadians.

But just like so many other goals, we often give up in frustration long before reaching the objective. The biggest reason: taking on too much too fast. If you want to lose weight, don’t try to go from couch-surfing and nachos to marathon workouts and all-broccoli diets overnight. Very few people can quit smoking cold turkey. And most people aren’t going to be able to cut their spending in half and start maxing out their RRSPs if they were living paycheque-to-paycheque.

The secret to success? Start small.

I’m only now coming back from nearly three years of physical inactivity due to injuries. I’ve lost a lot of muscle and put on a lot of weight. If I tried to jump right back in to where I was at my physical peak I would very likely re-aggravate my injuries and set myself back another six months or more. Instead, I’m taking it slow, and getting help. I’ve been meeting with a physiotherapist and a personal trainer to help design an exercise program that is appropriate for where I am today, and gets me started on the path to my short- and long-term goals.

So if you’ve never considered your long-term financial plan and haven’t started saving for retirement, here’s your first step: $25 a month into a TFSA. Put it in a 50% equity/50% income balanced portfolio fund.

You’re not going to retire rich on $25 a month, but it’s a start. That’s the real key here. Get comfortable with the money going out. Don’t pay too much attention to the account (so it doesn’t become a temptation to withdraw). Just let it run on auto-pilot for a few months. Then we’ll look at the next step. It might be increasing the deposit to $50, or opening an RRSP. It might be cleaning up your budget to pay off debt faster. But don’t try to do it all at once.

Start small. Get help.

Good luck in 2012!

If you’ve been stressing yourself out over whether to put money into your RRSP or the new(er) TFSA, here’s a video with Jamie Golombek (Managing Director of Tax and Estate Planning at CIBC Private Wealth management) where he discusses the results of his analysis of the relative tax benefits of the two options.

Spoiler Alert: There is no wrong choice.