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Slava · 02-19-2013, 08:44 PM

I wanted to take a few minutes and post something usable about RRSP's, TFSA's and how to get yourself saving. I've seen a lot of strategies that my clients use, and here are a couple for consideration. Some might work better than others in your personal situation, and in my opinion the important thing is to save money, regardless of what you decide on as the best choice for your investment! These are in no particular order, and I'll try to post some of the pros and cons of each idea:

1. Monthly/Biweekly Saving: Hardly earth-shattering, you simply set up an automated withdrawal directed to either the RRSP/TFSA and forget about it. I like this because the money just comes out and you basically forget about it after the first few times. I find it also builds quickly here and before too long you can build a nest-egg somewhat painlessly. The thing is, you need time for this and should buckle down and do it. You can do this with as little as $25/month and frankly we can all find that kind of money to save for our own future! The one drawback I would say is possible is that you might have transactional fees if you want to buy securities with this money every month, but there are many other vehicles you can use that make a lot of sense.

2. RRSP Loans: There are numerous strategies to use these and they can be really effective. You can get an RRSP loan, plunk it in before the end of the month, file taxes and use the refund to pay off 1/3 of the loan. I have some clients who take a loan every year and pay it monthly, which is basically a monthly contribution for them. The big advantage here is that they have it compounding for the entire year as opposed to putting the money in monthly. The main disadvantage is that you pay interest on this amount through the year, but the idea is to earn more than the interest rate through the year. You can also do "catch-up" loans where you borrow larger amounts for situations with a lot of contribution room and have the option of stretching the payback period back as well.

The main thing in setting up a savings plan though is to get it rolling sooner rather than later. Don't get paralysed by the multitude of choices and options, and don't over think what you need to do. Often the trick to successful investing has as much to do with not making a mistake as it does with finding something perfect. You can always change it later to something else, and you can always move from one investment vehicle to another as times and your opinions change.

02-19-2013, 08:44 PM	#93
Slava Franchise Player Join Date: Dec 2006 Location: Calgary, Alberta Exp:	I wanted to take a few minutes and post something usable about RRSP's, TFSA's and how to get yourself saving. I've seen a lot of strategies that my clients use, and here are a couple for consideration. Some might work better than others in your personal situation, and in my opinion the important thing is to save money, regardless of what you decide on as the best choice for your investment! These are in no particular order, and I'll try to post some of the pros and cons of each idea: 1. Monthly/Biweekly Saving: Hardly earth-shattering, you simply set up an automated withdrawal directed to either the RRSP/TFSA and forget about it. I like this because the money just comes out and you basically forget about it after the first few times. I find it also builds quickly here and before too long you can build a nest-egg somewhat painlessly. The thing is, you need time for this and should buckle down and do it. You can do this with as little as $25/month and frankly we can all find that kind of money to save for our own future! The one drawback I would say is possible is that you might have transactional fees if you want to buy securities with this money every month, but there are many other vehicles you can use that make a lot of sense. 2. RRSP Loans: There are numerous strategies to use these and they can be really effective. You can get an RRSP loan, plunk it in before the end of the month, file taxes and use the refund to pay off 1/3 of the loan. I have some clients who take a loan every year and pay it monthly, which is basically a monthly contribution for them. The big advantage here is that they have it compounding for the entire year as opposed to putting the money in monthly. The main disadvantage is that you pay interest on this amount through the year, but the idea is to earn more than the interest rate through the year. You can also do "catch-up" loans where you borrow larger amounts for situations with a lot of contribution room and have the option of stretching the payback period back as well. The main thing in setting up a savings plan though is to get it rolling sooner rather than later. Don't get paralysed by the multitude of choices and options, and don't over think what you need to do. Often the trick to successful investing has as much to do with not making a mistake as it does with finding something perfect. You can always change it later to something else, and you can always move from one investment vehicle to another as times and your opinions change.