With the RRSP contribution deadline looming early next week, Canadians are scrambling to pull money together so they can enjoy a reduction in what they owe on their taxes, or even get a refund.
About 64 per cent of Canadians have RRSPs, but many don’t save regularly for them. There is about $683 billion in unused RRSP contribution room in Canada.
Personal finance expert Gail Vaz-Oxlade says the first step is getting started as a saver.
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"There’s always a reason why you can’t save, but if you get into the habit of saving, you’ve taken a step across the line. You’ve gone from not being a saver, to being a saver," she said.
She advises paying off consumer debt as quickly as possible, but also putting money aside, even as little as $25 a month.
In an interview with CBC’s The Lang & O’Leary Exchange, Vaz-Oxlade, author of Money Rules, says the biggest mistake made by those who do contribute to an RRSP is putting in the wrong investment.
Vaz-Oxlade has three rules for RRSP investing:
- You cannot buy anything you don’t understand.
- You have to know your time horizon.
- You must buy something that fits your risk profile.