65717H(NC)—RRSP crunch time – that time of year when you search the nooks and crannies of your finances for the money you need to make your annual RRSP contribution. While that is absolutely the right thing to do, it’s also tough to come up with a lump sum any time – particularly right after holiday season.

Financial planning experts caution that leaving your RRSP contribution to the last minute also means you have lost out on all that tax-sheltered, compounded growth you could have benefited from through the year.

“Using a pre-authorized contribution arrangement, or PAC, is simple, easy to do and delivers long term benefits in terms of investment growth,” said David Ablett, a financial planning expert at Investors Group.

Ablett says that if you invest a lump sum once a year you are likely to end up with less money in the long run than if you divided the lump sum investment into 12 portions and invested monthly. The main difference, he notes, is that the money you invest each month begins to compound and grow earlier than if you waited to invest it once a year.

As time passes, your income changes and your life changes – so your PAC should change too. Financial planning experts suggest you reset your PAC annually. That way, you’ll keep your RRSP contributions and other investing in line with inflation and personal wage increases.

Your investment plan and your PAC are elements in a total financial plan tailored to help you achieve your goals. Your professional advisor can help you put a complete package together that is absolutely right for your life today and tomorrow.


This column, written and published by Investors Group Financial Services Inc. (in Quebec – a Financial Services Firm), presents general information only and is not a solicitation to buy or sell any investments. Contacta financial advisor for specific advice about your circumstances. More information on this topic can be obtained from your Investors Group Consultant.

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