4 RRSP Tips for Beginners

The COVID-19 pandemic has undoubtedly shaken up the retirement plans for many Canadians. Today, I want to look at four tips for those who are utilizing their Registered Retirement Savings Plan (RRSP). These are important to remember for investors of all ages.

Start saving early

This is a big one to remember for younger investors. The earlier you start investing in an RRSP, the less you must commit on a regular basis to meet your savings goal. For example, a 25-year old investor who stashes away $100/month while assuming a 6% annual rate of return will be able to meet a goal of roughly $200,000 in roughly 40 years.

Target global assets

After 2005, RRSP investors were permitted to allocate more than 30% of their RRSP toward foreign investments. This is great for investors who are hungry to invest in promising global equities.

Know your contribution room

An investor must have an earned income in order to contribute to an RRSP. The limit is 18% of earned income from the preceding year. Fortunately, investors can quickly find their limit by logging onto their Canada Revenue Agency profile online. Alternatively, they can also check their limit on their previous Notice of Assessment (NOA).