As the RRSP deadline looms, our brains can’t help but wonder how much taxes we could save if we contributed more to our RRSP.
RRSPs can be confusing so we’re help to help make it a little easier for you with some tips on choosing low fee RRSPs.
Free Yourself From High Fee RRSPs
Fees can really take a bit out of your retirement savings. While a difference of 1% in fees might sound like nothing, over time it could cost you hundreds of thousands of dollars.
According to an analysis by Nerdwallet.com, just 1% in fees could cost a millennial more than $590,000 in sacrificed returns over 40 years of saving.
ETF Funds Are Your Friend
One way to bypass high management fees is to invest in ETF funds. ETF funds represent a broader spectrum of the market than an individual stock and have lower management fees.
Tony Robbins swears by ETF funds in his book Unshakeable. You can read more about ETF funds from Tony Robbins here.
Wealthsimple offers investment portfolios made up of low fee ETFs that can be purchased within an RRSP (or RESP). Their ETF management fees are only 0.5% and you can trade up to $10,000 free by using our link here to sign-up for a free account.
You can also handpick and purchase ETF funds yourself through an online trading platform like Questrade.
Questrade offers low fee trades (1 cent per share, minimum $4.95 to a maximum $9.95). Our bank charges $9.95 regardless of the how small the trade is, so you can see how big the difference could be.
Do It For The Tax Break
Because RRSPs are tax deductible, they are a good option for investing in your future.
The amount of tax savings varies by province. Check out this handy RRSP tax refund calculator here.
Make It Automatic
The more you can automate the process by putting money away each month the better. Whether you stockpile the money for a lump sum investment, or auto transfer money every month into an investment, you’ll be ensuring that you are taking care of your future.
Paying yourself first and having these auto transfers come out when you get paid will increase your chances of sticking with your retirement investing strategy.