Finally no more sleepless nights worrying about whether I had contributed enough to my RRSP! Alison Miller, Small Business Owner. How to.

Transcription

1 Finally no more sleepless nights worrying about whether I had contributed enough to my RRSP! Alison Miller, Small Business Owner How to RRSP VERSION MAKE MONEY while you SLEEP Advice on automated RRSP contributions! Author of the bestseller HOW TO GET RICH USING OTHER PEOPLE S MONEY 1

2 CONTENTS Introduction 3 1. To begin, all you need are two nickels 4 2. The oldest trick in the book 5 3. Paying yourself first is incredibly easy 6 4. How much should you contribute? 7 5. Is once a year okay or do I need to do it more? 8 6. Wondering where to start? 9 7. Knowledge is power: The Retirement Calculator 10 In Closing 11 1

3 Most people who save via an automatic savings plan are amazed at how little they miss the money. They also tend to avoid classic overspending mistakes, such as paying too much for a house or a car. DAVID CHILTON, The Wealthy Barber 2

4 INTRODUCTION According to The National Sleep Foundation, Exercising regularly makes it easier to fall asleep and contributes to sounder sleep. Although they re probably referring to jogging, swimming or Tai Chi, they might as well be referring to exercising sound financial thinking. If you develop a solid financial strategy, and save regularly, it s likely you ll sleep soundly knowing that the goals you ve set will one day be realized. 3

5 1 To begin, all you need are two nickels. To begin, all you need are two nickels. Do you remember the 12-sided nickel? Pictured here, it was produced in Canada from 1942 to 1963 and to this day, it s somewhat of a collector s item. Anyway, to further this point, take any two nickels and rub them together. If you can, you ve just illustrated a classic idiom. Being able to rub two nickels together means you have the basic means to finance something. You have some money saved up. The question is, How to save up two nickels and much more? Read on

6 2 The oldest trick in the book. Saving money can be hard, especially if you have other commitments. Student debt, car payments, holy matrimony, a mortgage, children these can all severely hinder your ability to save. Fortunately, there is an effective way to save that doesn t discriminate with regard to how much you earn. It s one of the oldest tricks in the book and it s called paying yourself first. That s right, you pay YOU before bills and expenses. Me one thousand nickels Today $

7 3 Paying yourself first is incredibly easy. Starting with as little as one thousand nickels or $50 per month, we ll set you up so your desired monthly saving is automatically debited from your account and directed to a GIC, RRSP, TFSA or other savings vehicle. You decide how much, how often and where it goes. Then automated deductions make saving a painless habit. As David Chilton, author of The Wealthy Barber says, Most people who save via an automatic savings plan are amazed at how little they miss the money. 6

8 4 How much should you contribute? A general rule of thumb is to save 10 to 15 per cent of your income and to invest it into a mix of cash, bonds, GICs, mutual funds and stocks. But really, every situation is unique, and as mom said, something is always better than nothing. Plus, how much you save will likely change over time depending on your circumstances, as will the mix of where you save and invest your hard earned dollars. INCOME 10-15% 7

9 5 Is once a year okay or do I need to do it more? Definitely do it more biweekly or monthly is ideal. Get your money into your RRSP fast. Out of sight, out of mind. Automating regular contributions manages the risk of temptation. And we all know the temptation of electronics, dinners out and/or weekend getaways. It will also let you take advantage of another amazing thing called dollar-cost averaging. Smaller, more frequent contributions help smooth out the risk of fluctuating (especially less than desirable) interest rates and share prices. And finally, your contribution will start earning interest for your retirement savings right away, versus losing months of potential interest if you contribute annually. 8

10 6 Wondering where to start? Before you go to sleep, visit the experts at Coastal Community and set up an automatic savings program. Be sure to learn about mycoastal Retirement Plan while you re at it. Your mycoastal Retirement Plan provides many benefits, such as: A convenient way to save. Making regular contributions directly from your Coastal Community account makes it easier to commit to saving consistently. Even if the amount you contribute each time is small, it can grow very nicely over the long term. Tax-deferred growth. Growth you realize in registered plans occurs in a tax-sheltered environment until you withdraw funds from the plan. Lower investment management fees. Take advantage of the competitive investment management fees (IMFs) offered to Coastal Community members. Lower IMFs leave more of your savings in your retirement account and growing for you. Leading fund managers. Through your mycoastal Retirement Plan, you have access to some of the world s leading fund managers and their funds. Many of these funds aren t available to individual investors. Easy-to-read statements. mycoastal Retirement Plan statements provide updates on your savings and include tips and reminders to help you build an effective retirement savings plan. 9

11 7 Knowledge is Power: The Retirement Calculator. Everyone knows that knowledge is power, and we encourage you to calculate some different scenarios based on your situation with the retirement calculator at cccu.ca. Here s a snapshot of what Tom, 40, discovered, when he input some simple data. Based on these variables, Tom will be in good shape for retirement. However, if his average rate of return or yearly contributions change, Tom may be facing a different story. 10

12 IN CLOSING Review your plan annually with an expert to make sure you re on track to achieve your goals and revise your plan as circumstances change. Discipline, commitment and flexibility are keys to achieving your saving goals, and a good night s sleep. To help you with all of this, talk to the experts at Coastal Community. Call or visit the branch nearest you to make an appointment. This e-book is presented as a general source of information only, and should not be considered as individual financial, investment, or tax-planning advice. Readers are urged to obtain professional advice before acting on the basis of the material contained in this e-book. Our best efforts have been made to ensure that the material within this e-book is accurate at the time of publication. 11