Let Compounding Change Your Net Worth
An RRSP has a significant benefit that is often under-appreciated; tax-free compounding growth! Tax-free
compounding occurs because inside an RRSP, investments do
not incur tax on capital gains or investment income until money
is withdrawn. Therefore, your money can compound faster in an
RRSP as investment grow over time.
Will Your RRSP Meet Your Retirement Lifestyle Goals?
Most Canadians don’t have enough saved in their RRSPs
to meet their retirement goals. Let’s see an example: at an
annual contribution rate of $4,670 (average contributions in 2011
according to BMO’s 2011 study) over a period of 30 years, you
will have contributed $140,100 to your RRSP. Now let’s assume
that over this 30 year time period you earn a 5% compounded
rate of return and the annual inflation rate is a flat 2%, you would
end up with a real return of $237,688. This may sound like a lot of
money, but is it really?
Let’s consider a common goal of Canadians at retirement;
the freedom to travel. Take the example of someone who wants to
buy a moterhome and travel the open road. The average price for
a motorhome in 1982 was $24,500 and today’s average price is
$128,000, that’s a whopping $103,500 or 400% jump in price over
30 years! What if today’s average motorhome price jumps from
$128,000 to $520,000, a 400% increase over the next 30 years?
With only $237,688 in your RRSP, or with $500,000 saved, what
kind of motorhome and/or retirement lifestyle have you planned
for yourself? The solution to your worry starts by asking yourself
two important questions: 1) are you we willing to contribute more
money each year to your RRSP?; and 2) are you ensuring your
RRSP is earning a maximum risk-adjusted return?
RRSP’s are not Investments
Many Canadians still think an “RRSP” is an investment onto
itself, but it is not! RRSP’s are a tax planning and savings tool and
once you allocate money to your RRSP you still need to invest
and manage the money wisely to maximize annual growth.
Common RRSP Investment Choices
Many Canadians are unaware there is a wide range of
investments that can be purchased within an RRSP. The BMO
study found that in 2011, the investment choice for 59% of
Canadians were mutual funds. After that, 25% chose GICs, 22%
chose equities, 12% chose bonds and 6% chose ETFs. I doubt
many of the 60% are very happy with the returns on those mutual
funds these days.
Helping Companies Access
RRSP Investment Dollars Since 1995!
Did you know that Canadians hold more than $590 billion in their RRSPs?
Are you able to access these investors?
Knightswood Financial is a solution provider to private entities
looking to raise capital from qualified Investors with
registered accounts (e.g. RSP’s and TFSA’s).
For more information, please contact:
Stephen McCoach at 604-601-5801 or email@example.com
or visit our website: www.knightswoodfinancial.com