As the deadline for making a registered retirement savings plan contribution for the 2015 tax year is set to expire Monday, Canadians are faced with an uncertain market that's down three per cent this year and low rates on term deposits.
Last-minute investors will be scrambling to get money into a plan: they have until 11:59 p.m. local time.
- RRSP season 2016: special report
- CBC Forum: Is an RRSP right for you? Personal finance expert answers your questions
Any cash they get into an RRSP now will reduce their taxable income for 2015 and could result in tax refund.
Then the hard part begins — deciding how to invest so those hard-earned savings grow into a pot of money for use in retirement.
Doce Tomic, president and CEO of Credential Financial Inc., says he believes Canadians are increasingly taking a more disciplined approach to RRSP investing.
Credential — a Vancouver-based wealth management firm that works with credit unions across Canada — and its advisers report there is less of a last-minute scramble to beat the RRSP deadline, Tomic told CBC News.
"The deadline for the RRSP season four or five years ago really was the trigger for the event, so everybody would come in fairly last-minute and make a contribution," he said.
"I see a lot more contributions happening throughout the year in a very disciplined manner."
Try not to time the market
Plunking down a chunk of money on Feb. 29 is a form of timing the market, Tomic points out, meaning an investor puts all of his or her money in at one time and just hopes the market doesn't fall immediately.
That's not the best way to get long-term growth on RRSP savings, he said.
Tomic recommends contributing monthly to get the benefit of dollar-cost averaging and setting up an investment that is diversified both by asset classes and geographically.
GIC rates may be low and bonds return very little, but investors often opt to have part of their portfolio in these safer instruments, depending on where they are in life.
"Sit down with an adviser and develop a plan in terms of the investment philosophy, investment risk profile and asset allocation," Tomic said. "Along with that, do an annual review in terms of where you are in your plan, where you are in your life."
There's also a place for stocks. Tomic added Canadian investors are showing signs they're willing to wait out volatile and unpredictable equity markets.
"We do see some redemptions when markets are volatile — as in early January," he said. But the cash flowed back in again when stocks became more stable.