It’s cold outside. It’s also Friday the 13th. Yikes.

 

We all knew the cold was coming but somehow it’s still hard to accept. Then again, it’s February, so it’s expected. All we can do is deal with it. February also brings with it a few other reliable items:

 

a) Family Day
b) Valentine’s Day
c) The chaos of last minute RRSP contributions
d) A transition into tax season
e) The desperate hope for sunshine & warmth being potentially 3 months away…

 

I’ll quickly touch on the first three as this week’s edition of Word on the Street is standing between me and getting to a cottage at some point this evening…

 

In the spirit of Family Day, a holiday which celebrates the importance of families and family life to people and their communities, I’ll point your direction to a great publication our Wealth Management team has put together which outlines 10 strategies to building and protecting your family’s worth. For your complimentary copy of the Family Wealth Management Guide, just say uncle.

 

For Valentine’s day last year I wrote you all a love poem from your portfolio, it went a little something like this: Roses are red, violets are blue, your stocks don’t love you. Read more about how taking the emotion out of investing can help you get ahead below in last year's post. But since I love you all and because I want to make sure that your retirement plan in on track, this year I’ll remind you to make your RRSP contribution before March 2nd, 2015.

As a reminder, you can contribute up to 18% of your 2013 earned income this year, to a maximum of $24,270. For your exact contribution limit, please check your latest Notice of Assessment, Notice of Reassessment or T1028 form, or log on to your Canada Revenue Agency account at www.cra-arc.gc.ca/myaccount.

 

So, why contribute to your RRSP?

• The amount you contribute is a tax deduction from your income, reducing your taxable income for the year (or potentially prompt a refund from the CRA!)
• If you get a refund, reinvesting supercharges your RRSP, thanks to the magic of compounding.
• Note that you can also make your 2015 contribution any time now in 2015 to benefit from additional tax-deferred compounding. The maximum RRSP contribution for 2015 is $24,930.
• You benefit from tax sheltered growth while the money is invested within your RRSP
  There is no withholding tax on foreign dividends within an RRSP… especially beneficial for diversification outside of Canada.
• Sure, you’ll eventually have to pay taxes on RRSP withdrawals in retirement, but if you earn less income in your post-working years, you will be taxed at a lower rate while reducing your rate in your prime income earning years.
• You can make tax forgiven withdrawals as a first time home-buyer or within the lifelong learning plan, so long as you pay yourself back.
• The general rule of thumb is that if you earn more than $50,000/year, you are better off maximizing your RRSP first, then your TFSA.
• Check out the article herefor 12 smart ways to maximize your RRSP