RRSP’s Should You Have Them?

Crystal Taylor
Jan 24, 2022
2 min read

Understanding how they can impact your goals.

We all know people who think RRSPs are a terrible idea. Over the past decade and a half, I’ve run into many individuals who have painted RRSPs with a negative brush. Many of them have been missing out on amazing benefits, and in some cases, years of compound interest potential. We help many of them pivot with confidence in their new path towards financial success.

On the flip side we have met with people who have been contributing to RRSP’s when it was a

terrible decision. One recent example is a stay-at-home parent with a tax bill of $0.00 being advised to contribute to RRSP’s by a “Financial Advisor.” They will now have to pay taxes to redeem the RRSPs. The math gets even worse when you discover that the spouse is in a high tax bracket and could have been contributing in a spousal nature…

Let’s dive into an example of how RRSP’s helped a young couple who were previously told negative information about RRSPs.

With days left in the 2020 RRSP season we received a referral from an existing client. This couple booked a time through our online booking system. They are a younger couple finally making great money and saving to purchase their first home. The inquiry was about allocation - where to invest their savings to get growth, but to ensure that the funds were available when they were ready to purchase their home.

Because this was a shorter-term goal with growth as a requirement, allocation was very important, but more important was that we were able to illustrate what they were leaving behind in tax dollars by only using TFSA savings. By switching to RRSPs and harvesting additional tax dollars, they shaved YEARS off their goal. They opened their accounts, explored their risk tolerance, and received a sizeable tax refund (which they reinvested for 2021). They’ve experienced 2 reviews since, and they are very excited to be shopping for their home soon.

Everyone’s situation is different. This is shared to highlight that working with a Trusted Advisor who is on your side and compensated by your financial success, will maximize your plan’s effectiveness and give you the ability to push forward with confidence and clarity.

To understand more about RRSP's please take advantage of a free no obligation 30 minute discussion with me using this link.