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Getting Across the RSP Finish Line: Last Minute Tips from TD Bank Financial Group

4 minute read
By TD Bank Group
• Feb. 27, 2007
TORONTO, Feb. 27 /CNW/ - The 2007 RSP Season is drawing to a close. Despite the warnings they've been hearing for years about missing the March 1st deadline, many Canadians still have not made their RSP contribution for the 2006 tax year. OK, Canada, listen up. The friendly advisors at TD Bank have teamed up to provide a timely set of tips for last-minute contributors (you know who you are!): 1. Contribute now, think about investing later. "Some people let fear of making the wrong investment decision keep them from contributing in the first place," says Mushtak Najarali, Associate Vice President, Term Products, TD Canada Trust. "The good news is you can beat the deadline and get your tax deduction. Park your money in a low-risk account, such as a daily interest RSP, and then take the time you need to decide how to invest it." 2. If you're worried whether you can afford to contribute, talk to a financial professional. "Many people decide too quickly that they can't afford an RSP contribution, without thinking through the options," says Sarah Armstrong, Manager, Personal Lending, TD Canada Trust. "Ask yourself: 'Can I afford not to do it?' In today's low interest rate environment, and with flexible RSP loan options, an RSP contribution may be easier than you think." 3. Don't think you have to be debt-free before you can make an RSP contribution. "Too many Canadians see paying off debt and saving for retirement as an either-or proposition," says Patricia Lovett-Reid, Senior Vice President, TD Waterhouse Canada Inc. "That's the wrong approach, and if it's keeping you from contributing to your RSP this year, talk to a financial advisor. They can show you how a balanced approach is often best bet to reaching your goals." 4. Consider income-splitting strategies. "Consider taking advantage of a spousal RSP to generate retirement income that is subject to less tax," advises Mike Reilly, President, TD Waterhouse Private Investment Advice. "This strategy works if your spouse's income will be lower than yours over the next few years or in retirement." 5. Don't put all your eggs in one basket. "Ensure your investments are diversified across different assets and sectors," says Tim Pinnington, President, TD Mutual Funds. "While balanced may seem boring, it's critical to make sure your money keeps growing, no matter what blips happen with individual stocks or sectors." 6. Establish a regular contribution plan. "Take the pain out of RRSP season by setting up a regular, automatic RSP contribution plan," says Richard La Ferrière of TD Waterhouse Financial Planning. "Along with the satisfaction of knowing you're thinking ahead, you'll avoid next year's February rush and benefit from the power of compound interest." 7. Think international. "We think that US and European equity markets are good bets for 2007," says Bob Gorman, Chief Portfolio Strategist, TD Waterhouse. "And in the long run, you are going to earn better returns and reduce risk if you have some international exposure in your RSP portfolio." 8. Designate a beneficiary for your RSP. "RSPs make up the bulk of many people's assets, yet many don't designate a beneficiary or take into account tax consequences when they do name a beneficiary," says Bill Fulton, Senior Vice President, TD Waterhouse Private Client Group. "RSP assets designated to a spouse can be automatically transferred tax-free to their plan, avoiding probate fees and income taxes." 9. Resist the urge to dip into your RSP. "Carefully consider the consequences of accessing the investments in your RSP. In addition to the tax implications, there is the simple fact that the amount you can contribute to an RSP in your lifetime is limited and a withdrawal erodes some of this potential," says Lovett-Reid. 10. Don't mistake an RSP for a complete retirement plan. "Contributing to your RSP is important, but it's just one component of retirement planning," says John See, President, TD Waterhouse Discount Brokerage, Financial Planning and Institutional Services. "That includes determining the lifestyle you want in retirement, calculating the amount of money you need to achieve it and developing a strategy to reach that goal." About TD Bank Financial Group The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Financial Group. TD Bank Financial Group serves more than 14 million customers in four key businesses operating in a number of locations in key financial centres around the globe: Canadian Personal and Commercial Banking including TD Canada Trust; Wealth Management including TD Waterhouse and an investment in TD Ameritrade; Wholesale Banking, including TD Securities; and U.S. Personal and Commercial Banking through TD Banknorth. TD Bank Financial Group also ranks among the world's leading on-line financial services firms, with more than 4.5 million on-line customers. TD Bank Financial Group had CDN $408 billion in assets, as of January 31, 2007. The Toronto-Dominion Bank trades on the Toronto and New York Stock Exchanges under the symbol "TD". For further information: Stephen Ledgley, NATIONAL Public Relations, (416) 848-1376, sledgley@national.ca; Lisa Hodgins, TD Bank Financial Group, (416) 983-2982, lisa.hodgins@td.com

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