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RRSP Deadline

The RRSP Deadline for the 2009 tax year is March 1, 2010. Many Canadians wait for the last moment, or close to it, to make their annual contribution. There are a number of good reasons not to make savings investments this way and instead contribute with regular installments over the year.

Reason #1, The deadline could force you into buying an investment when prices are down or force you to park you money until markets are better. Doing this is essentially timing the markets, a game that few win at and is not a recommended investment strategy.
Take a Dollar Cost Averaging approach. By contributing to your retirement savings plan regularly you make a large number of small purchases. These purchases will be bought at market high and lows, but over time you will get an average of the market, where as with a lump sum purchase you get the price the day you buy, be it high or low.

Reason # 2, Regular Contributions promote a 'Pay Yourself First' habit that financial planners recommend. Get used to putting aside money every month and in time you will never miss it. Take the attitude that regular investing is no difference than groceries from a necessary expense point of view.

Reason # 3, It is not easy to come up with a lump sum all at once. Yes, retirement savings plans loans are available but they provide the most benefit if the tax refund is applied to the loan, which is not always the case.

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