It's that time of year again. The time when people rush to make the RRSP Deadline for 2011.

Here in Canada the CRA or Canada Revenue Agency, allows residents to contribute to their RRSP within the first 60 days of the following Calendar year. And this year is a leap year as well, so we are given 1 extra day to contribute!

The RRSP contribution Deadline for 2011 is February 29th 2012. This means all contributions must be made before March 1st 2012, and since we have a leap year, that means we have 1 more day than normal this year to contribute. But why the rush? Why do so many people wait until the last minute to contribute? As it is a fact that over the last 50 years of investing,  those who contribute systematically, ie monthly will always beat a 1 time deposit at contribution time.

Even in RRSP investing, it is all about supply and demand. Demand for Investments goes up between January and March consistently every year, in 2005 we saw the trend, in 2006 same, in 2007, 2008, 2009, 2010, 2011 and now it is trending higher again for the rush to Invest.

So by using a systematic approach to investing, by setting your RRSP up on a monthly PAC program, you will benefit by Averaging out your purchases of Investments. When the prices of Investments are high, you will buy fewer units of that Investment, and when the prices of Investments are low, you will buy more units of the same Investment. That way by the end of the year, you will have made a better return simply by setting your RRSP on Autopilot.

As well the maximum allowable contribution to your RRSP in 2011 is 18% of your Income, up to a maximum of $22,450.
Any un-used RRSP room will be carried forward for use in future years. So if you only have $10,000 to contribute for this year, $12,450 will be carried into the future. This is important as it will allow you to make large deposits into your account in the future, and can potentially eliminate taxes due in a future year of income.

Here's how it can work for you...
Lets say you have an RRSP maximum contribution limit that you have been accumulating over the years, and it has now added up to say $75,000. And maybe in the year, you receive an inheritance of $75,000 from a deceased relative. You can take that $75,000 and directly invest it into your RRSP account, and you will make the first $75,000 of Income in that year, entirely Tax Free. Now if you didn't have the contribution room, or the income of $75,000 for that year, then the numbers would be adjusted, but it gives you an idea of how the Carry Forward can work for you in the future.

Another Great Idea for your RRSP.
What about an RRSP catch up Loan? Here you can make one large deposit, and pay for it into the future. So if you have a heavy tax obligation for 2011, and you have a lot of unused RRSP Contribution room, you can use this strategy to reduce your taxes today, while paying for the loan over a specified period of time, such as 1 year, 2 years, 5 years or even 10 years. This way you get the benefit of Investing today & the Tax Deduction of today, without the financial burden of trying to come up with a huge sum of money.

There are many ways to maximize the value of your RRSP, but you have to do it before March 1st 2012, or you will lose the Tax Deduction of an RRSP for the 2011 Tax Year.

We help so many people throughout the year, but it is certainly the busiest time of year between January and March, please give our office a call today, and see how we can help you out as well. We have no minimum account values to work with our clients, so if you have $1,000 or $100,000, we are here to help either way. As well, we do not charge any fees to our clients, as we are paid by the Financial Institutions whom we place your money with. This is one of the great benefits of working with an Investment Broker, as opposed to one of the Big Banks.

Steffen deGraaf

Check out these great Articles too!

The Safety of Bond Funds in your RRSP for 2012…

The Top 5 Ways to Protect your RRSP in 2012…

Top 5 ways to Supercharge your RRSP in 2012…