Monday, December 1, 2014

RRSPs - Part 2

If you have read my previous post on Equity's RRSPs, you will know that returns on our funds are right up there with others available in our industry. We offer eight options that run the gamut from the very conservative to the very aggressive. Invested in several of them, members would have doubled their money within ten years, and that's including a period that spans the last recession. Not too shabby.

However, it doesn't matter in the least how good the returns are, if:
  • We can't deposit your RRSP contributions into your fund; and 
  • You don't leave them there.
Every month, we publish a list of members for whom we are holding RRSP funds, but who have not opened an RRSP account. You've seen it, I'm sure. If you are on this list, we are holding onto your money, but cannot deposit it into your account until you fill out the really simple paperwork.

If we cannot deposit your money in your account, it will eventually get donated to the Actors' Fund of Canada. A very worthwhile cause, to be sure, but not the same thing as contributing to your RRSP. If you haven't already opened an RRSP account, please follow these instructions, and fill in this form, and keep what you've been giving away.

Then, leave the money in there and let it grow!

Each year, a truly astonishing amount of the contributions made are withdrawn. I'm not talking about members who transfer their money into some other registered investment. Nor am I talking about members who withdraw some of their money for one of the reasons that RRSPs allow for – lifelong learning, or putting a downpayment on a house, for instance – or to deal with a sudden financial crisis.

I'm talking about members who withdraw their RRSPs in cash, all of it, and regularly.

This is a tough business, and money is frequently/always tight. Even at the best of times, it's difficult to save for tomorrow. So why not make use of the opportunities that exist? The amount of money diverted from your paycheque is small, but the opportunities for its growth are very good. It makes no difference to Equity whether you withdraw money from your RRSP or not, but it sure could make a huge difference to your future

And then the next time I post a comparison of RRSP returns, it won't just be some bit of abstract trivia. You'll be able to say to yourself: "Excellent, and I've got a piece of it!"

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