Dale Jackson

Personal Finance Columnist, Payback Time

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Turbo Tax released a survey heading into last week’s registered retirement savings plan (RRSP) deadline showing 31 per cent of Canadians planned to contribute this year. For those who simply parked it in cash for the tax deduction, it’s time to start thinking about putting that contribution in drive.

First, there is no deadline to invest. You can keep it in cash if you’re fine with dead money not growing tax free. With the rush behind us it might be a good time for a sit-down with your advisor to talk about a long-term strategy. If your portfolio is already diversified you might want to top up some core positions. If it’s not diversified, you can fill in the gaps.    

If you are a long-term investor it might be best to leave market timing to the pros. To avoid rushing to make a last-minute contribution next year, consider a regular payment plan over the course of the year. It’s an investment strategy called dollar-cost-averaging that smooths out volatility by investing at regular intervals. If the investment falls in value, the average cost (and break-even point)  falls. If it goes up — great. 

It’s also important to keep an eye on your RRSP contribution limit. Over-contribution penalties can be expensive. Limits are based on the previous year’s income, so the CRA will provide the exact amount after you file your 2017 taxes. The deadline for that – by the way – is April 30.