4 Reasons to Start an RRSP while you’re Young

After paying rent, bills, and covering your basic needs, spending the rest of your paycheque on fun can be extremely tempting. Investing in an RRSP may not make the list after debt repayment, travel or even purchasing a new car, but by starting early you’ll set yourself up for future success. It’s something to think about, even if you can only contribute a small amount per paycheque.

Without further adieu, here are 4 reasons to start an RRSP while you’re young:  

1. EDUCATION

Using the government’s Lifelong Learning Plan (LLP), you can use up to $20,000 in funds from your RRSP to pay tuition for an approved full-time program in Canada.

Just like with the Home Buyer’s Plan you’ll have to pay yourself back in interest-free instalments over a number of years

2. HOMEOWNERSHIP

If you see homeownership in your future, an RRSP can help you get there faster. Using the Home Buyers’ Plan you are able to use up to $25,000 of your RRSP towards the down payment on your first home. 

Be aware that you will have to and pay yourself back the amount that you borrowed from your RRSP in interest-free instalments over the next 15 years.

3. POTENTIAL

With compounding interest -  the interest you earn from your RRSP earns even more interest which means the earlier you start, the more you earn.

For example: an average rate of 10%, a 25-year old who contributes $5000 year to his or her RRSP will wind up with $2,212,965 at age 65. So a lifetime contribution of $200,000 could earn $2,012,965 in compound interest by retirement.

4. TAKE RISKS FOR HIGHER RETURNS

It’s simple: investing early gives you more options on how you want to use your RRSP, and what to invest in as well. When you’re in it for the long haul, you can up your investment risk tolerance. Whereas If you start saving later in life, you might want a safer investment that has less potential to fluctuate. When you open an RRSP we’ll help you asses your risk tolerance, so your money grows how you want it. 

So there you have it. Even by starting with small contributions in your 20’s, say $50 every pay period, you’ll set yourself up for financial success later in life.

Getting started is easy - simply contact us to open an RRSP investment today. Call or email us at info@weyburncu.ca and let’s chat about your options.