Get your money out for savings

19th January: Are you still keeping your money buried under your mattress and trying to avoid making savings of any kind? Watch out.

For, it’s time you begin taking out your hidden cash for making savings somewhere rather than keeping it lying aimlessly.

Contribution rates decline among Canadians--The number of Canadians making contributions towards RRSPs(A Registered Retirement Savings Plan) has went down significantly in the year 2010 calling for the need to reverse such a trend.

As per the figures made available by Statistics Canada, contributions towards RRSPs were made by nearly 5.96 million Canadians which is down by 0.2 percent from the year 2009. Although, there has been an increase of 2.6 percent in the figures of total contributions by Canadians , many of them don’t make any contributions towards RRSP.

And the figures further suggest that out of 93 percent Canadians filing tax returns, only 26 percent made contributions in the year 2010. All these figures show that Canadians seem to have become wary of making contributions and prefer keeping their money under their belt. That’s despite the fact that majority of Canadians don’t have any company pension plan after retirement.

Canadians favor RRSPs over stock market–A major excuse citied by most of Canadians for such lack of initiative in making contributions is none other than higher element of risk involved in stock market investments.

And nearly 10 percent Canadians preferred making investments with RRSPs rather than risking their savings at highly volatile stock market, findings of a recent poll undertaken by Investors Group show.

This attitude of shyness for savings is not just for stock market or RRSPs. In fact, Canadians take a second thought before plunging money into bond funds or bonds as well. That’s because they think the rates of interest are too low and once they begin rising, bond investors will suffer huge losses.

Good time for RRSP contributions–Canadians, you still have time to make contributions to RRSP since the last date for doing so in 29th Feb, 2012.

This will make you eligible for some interest on income apart from making your income tax-free. And don’t cite the excuse that you don’t have sufficient funds to invest because following regular programs of investment will allow you to make monthly payments easily rather than going for huge lump-sum payments.

The only thing is to make some prior planning.

Consider this–you can make use of your pre-authorized chequing arrangement (PAC) to make payments every month out of your bank account. Your PAC can be used as a proof to convince your employer for making lesser tax deductions at source and enabling you to get your tax refund every couple of weeks. And the paycheque that comes into your bank account can be put back in your RRSP.

Liked the above Article? You may be interested to try the following products too!!