"A plan registered with Revenue Canada
that encourages Canadians to save for retirement
by providing tax relief on contributions and earnings."

Almost everyone has heard of an RRSP and many people own them. But an RRSP is only as good as the planning that goes into it. No matter what your retirement dreams may be, there are really only two solutions to the challenge of how you are going to fund your retirement: you can save more now or work more later.

RRSP's provide you with an exceptional opportunity to save for retirement. Not only are RRSP contributions tax-deductible, but also all of the growth and income earned on those contributions compounds on a tax-deferred basis.

Why an RRSP?

When the Canada Pension Plan (CPP) was originally established, it was intended to provide Canadians with retirement income representing about 75% of their average wage. As you may know, pressures on government spending are going to make this goal a slim possibility.

Every year, more Canadians decide to take responsibility for their own financial well being by investing in a Registered Retirement Savings Plan. RRSP contributions reduce your annual income tax bill. And even better, this investment is allowed to grow tax-free. It is the best options you have to ensure a comfortable retirement.

RRSP Strategies

The most popular strategy for maximum potential performance and minimum risk is diversification. In other words, a portfolio will perform best over the long term if it contains a variety of investments. To diversify by asset class, investors can combine growth-oriented equity funds and fixed-income vehicles (e.g. money market funds, bond funds) in an RRSP portfolio. To diversify within an asset class, investors can combine international stocks with Canadian equity investment. Studies have shown that 90% of excess investment returns are determined, not by choice of investment vehicle, but by the way assets are allocated in a portfolio.

Dollar Cost Averaging

Dollar cost averaging simply means making regular contributions directly into your RRSP, which averages your share price over time. With this method, a temporary dip in the fund's value is actually good news; a lower unit price means your regular contribution amount will buy even more units and the positive impact of a rebound will be magnified in your portfolio. This painless approach of "paying yourself first" is a proven method of investment growth.

Investing For the Long Term

Market fluctuations are a reality, regardless of what type of investments you own. Reactionary investors often sell their investments at the worst time. It is almost impossible to 'time' the market. The key is to create a diversified plan with your investment advisor and stick to it.

Maximize RRSP Growth

RRSP investment regulations permit holding up to 30% in international investments. Maximizing the foreign content component in your RRSP offers more diversification, a hedge against the value fluctuations of our dollar and potentially higher investment returns. Your investment advisor can suggest a wide variety of funds designed to take advantage of this opportunity.

What is a Registered Retirement Income Fund?

A Registered Retirement Income Fund (RRIF) is a highly flexible retirement income earning product that remains tax-sheltered until you withdraw the funds.

Why would I want to have a RRIF?

You have saved for many years in your RRSP to be able to enjoy your retirement. A RRIF is a very useful tool that will make use of your RRSP funds to provide you with income.

RRIFs are designed to allow you to maintain your desired lifestyle so you can relax and enjoy your retirement years, while allowing your invested funds to grow tax-sheltered until you withdraw them. Furthermore, an RRIF allows you to provide a long-term benefit for loved ones (your spouse, or heirs) if you pass away before exhausting the funds. By naming your spouse as a successor annuitant, you can use an RRIF to provide a long-term benefit after your death. You may also designate a beneficiary to receive a lump sum payment from your RRIF. Tax relief is available if your beneficiary is your spouse or a dependent.

How does an RRIF work?

By converting your existing RRSPs to an RRIF, you position yourself to receive income payments for the remainder of your life. RRIFs are a highly flexible option that allows you to:

• Decide how often and how much you wish to take out of the plan (subject to the minimum required amount)
• Decide what investments to hold under your RRIF plan
• Decide when to collapse the plan
• Consider tax and estate planning

All payments from a RRIF are added to your taxable income for the year in which you take a payment. Taxes are withheld at the time of withdrawal on any amount withdrawn over the minimum required amount.