The periodic savings plan: the easiest way to contribute to your RRSP and your TFSA

“The impossible does not exist for someone who divides it into many possible efforts.” Robert Talbot

These wise words remind us that even a small effort eventually bears fruit. They’re especially apt when it comes to saving. When repaying a bank loan, most people opt for periodic payments that let them pay an amount proportional to their budget over a realistic period. It’s the basis of sound budget planning. 

But too many people still wait until the last minute to contribute to their RRSP and find themselves having to borrow money or to earmark a large amount of their net income to do so. A periodic savings plan means you can avoid such pressure and it offers many other advantages.

In fact, a periodic savings plan is the best way to invest in mutual funds.  

Here’s why:

1. YOU PAY YOURSELF FIRST

   It’s simpler to synchronize your contributions with your paycheque. In this way, saving becomes a habit and is incorporated easily into your budget. In other words, you should pay yourself first! It will also enable you to plan for major expenditures. Instead of paying interest on a loan, you can gradually save the amount you need. 

2. YOU TAKE THE EMOTION OUT OF DECISION MAKING

   The stock markets go through sustained rallies but also sharp corrections. Investors who act on their emotions tend to buy high and sell low. In other words, they buy at a premium and sell at a discount, or even at a loss, which is contrary to investment logic. A preauthorized contribution plan takes the emotion out of the equation: whatever the stock market does, you invest the same amount and you stay in the market. You don’t have to ask yourself whether it’s the right time to invest. In any case, timing the market is impossible to do. 

3. YOU TAKE ADVANTAGE OF MARKET VOLATILITY
   In very volatile or down markets, a preauthorized contribution plan can mitigate your portfolio’s exposure to market fluctuations. With a preauthorized contribution plan, you obtain more units when the market is down, because the price is lower. Conversely, you continue to invest as the market goes up, but you obtain fewer units. When the markets rise, you receive an increase in value for a larger number of units and you reduce your average purchase price.  

As you can see, investing regularly offers many advantages. You can start your savings plan with as little as $50 per period (weekly, semimonthly, monthly or quarterly). A preauthorized contribution plan is simple, flexible and easy to manage. Try it with a small amount and then increase the contribution whenever you can. You’ll see the funds for your projects gradually accumulate. 

It’s up to you to take advantage of it!

For insightful advice, whatever your situation, don’t hesitate to contact our Advisory Services. Our team of Mutual Fund Representatives has all the tools to help you build a solid financial plan and a diversified portfolio. They can also show you how to optimize your financial situation and help you save – all at no additional cost. [i]

Set up a periodic savings plan or contribute now  to your RRSP and your TFSA and take a step toward achieving your financial independence! There are prizes totalling $2,000 to be won. [ii]

The deadline to make your 2016 RRSP contribution is March 1, 2017.

Advisory Services

514-788-6485

1-800-291-0337 (toll free outside Montreal)

[email protected]

Monday to Friday, 8 a.m. to 8 p.m.