You don’t want to try and time the market; you want to give your investments time to grow and ride out the ups and downs.
“Timing the market” can lead to disastrous results. I have many examples of this working in the financial industry for the last 5 years.
A great example of this is in 2020 when so many people jumped into “GameStop” stocks and were all excited it was the next best thing and they were going to be rich.
So don’t be like these people because a lot of them lost a lot of money on that and didn’t end up rich so don’t be like them.
To show you another example I have attached an article I found about timing the market.
The best (safest) play is to consistently invest (get to first base).
That’s why the RRSP is such a popular option for people looking to save for their retirement.
It’s a tax-efficient way to save and can help lower the tax rate you pay.
RRSP stands for Registered Retirement Savings Plan, and it’s an account registered with the Canadian Revenue Agency.
You can hold investment products like bonds, GICs, mutual funds, and segregated funds or use them as a regular savings account.
Good news: any money you put into the account won’t be counted as taxable income for that tax year.
Here is an example, if you make $56,000 and put in $6,000, you’ll only be taxed $50,000 for that year. Plus, lower taxable income can also lower the overall tax rate you pay, as different amounts of income are taxed at different rates in Canada.
Now, I know what you’re thinking. What’s the catch?
You’ll eventually have to pay taxes on the amount when you withdraw it from the RRSP. However, any earnings on the investments will remain tax-free while inside the account.
The goal is to make withdrawals when your income is lower than it was when you put the money in. So, you put the money in when your income is higher and your tax rate is higher, and then withdraw it when it’s lower.
Let’s say you make a withdrawal of $6,000 from your RRSP at 65, but your income at that time is only $44,000. Your taxable income for that year will be $50,000, a bit higher than it would’ve been, but you’ll have successfully avoided paying the higher tax bracket rates.
There’s a deadline for RRSP contributions, which is always 60 days into the calendar year, and this year it’s March 1st.
There are limits to how much you can contribute yearly, and you can check your contribution limit on your CRA My Account or on the statement you get from CRA.
The maximum contribution for 2023 is $30,780.
So, remember, investing in your future is important.
RRSP is a tax-efficient way to do it. Take advantage of it, and you’ll be glad you did in the long run.
You don’t have to change anything you are, doing or not doing now, but you may not get to retire the way you want and have to work till the day you die.
If you have any questions or need help putting some of these solutions in place:
Call me: Tanya Millar
Contact me at (587) 850-5832 or Tanya@tanyamillar.ca