How to avoid the financial fear factor

Experienced investors consider RSPs a great way to save for retirement while taking advantage of certain tax benefits. However, many Canadians avoid setting up an RSP as they perceive these plans to be complicated and difficult to fund.

With this year’s March 1 contribution deadline looming, Steve Lee, Bank of Montreal branch manager, Invermere explains some common reasons why Canadians are reluctant to meet with a financial planner, and more importantly, how financial planners can help us get organized financially and stay on track.

1. You don’t know where to start.

The government makes it easy for Canadians to save for their retirement with RSPs.

An RSP is an ideal investment vehicle because it allows your money to grow in a tax-sheltered environment until it’s time to withdraw your money.

The contributions are also tax deductible, so they can help reduce the amount of income tax payable for the year in which the contribution is made.

To set up an RSP, it’s best to start with some professional help to guide you through the process step by step.

For example, you can meet with an investment professional.

2. You are self-conscious about your debt and don’t want to be lectured about poor financial management.

The first thing to know is that you are not alone.

However, if you do have debt, it’s important to address it now, so that it won’t impact your future.

Whether your plans for the next five years include buying a house or starting your retirement, a financial planner can help you develop a balanced strategy to achieve your goals without completely compromising your lifestyle.

3. You don’t feel you have enough money to meet with a financial planner.

There are different types of investment products for different types of investors, and a financial planner will help you determine what’s best for you.

Investments such as mutual funds have appeal for both novice and seasoned investors and many mutual fund companies offer continuous savings plans (CSPs) whereby investors can start an RSP by contributing as little as $25 a month.

4. You didn’t save enough money for your RSP this year.

You don’t need to miss out on the tax benefits of investing in an RSP just because you didn’t save enough money.

You may be eligible to take out a loan from your financial institution to max out your annual contribution and set up a payment schedule to pay it off within the year.

Remember, when you receive your tax refund, you can use it to pay down your loan. To learn more about saving for retirement, meet with an investment professional.

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