Bank of Montreal : BMO's Financial Tip of the Week: Invest in an RRSP

TORONTO, ONTARIO--(Marketwire - Jan. 6, 2012) - As part of BMO Financial Group's ongoing commitment to financial literacy and 'Making Money Make Sense' for Canadians, BMO will be releasing a financial tip every week in 2012.

BMO's Financial Tip of the Week:

Consider investing in a Registered Retirement Savings Plan (RRSP) and take advantage of tax incentives when saving for retirement.

A study by BMO has found that almost 30 per cent of Canadians are unfamiliar with how an RRSP works. An RRSP can be a powerful and effective savings vehicle to fund one's retirement.

What is an RRSP?

An RRSP is a registered plan that allows you to save for retirement in a tax-efficient manner.

• Within an RRSP, portfolio investors can hold a variety of investments including guaranteed investment certificates (GICs), mutual funds, exchanged traded funds (ETFs), bonds and equities.
• The money you invest within an RRSP grows tax free. Since you pay no tax on investment growth while your money remains invested in an RRSP, your investments compound far more quickly than they would have if invested outside of one.
• Additionally, annual contributions (up to a maximum of $22,450 for the 2011 tax year) made into an RRSP are tax deductible based on your unused contribution room. This can result in a lower income tax bill.

"Investing in an RRSP should be a staple in any retirement savings plan as it's the most effective tool in providing the funds needed to help Canadians be financially secure during retirement," said Tina Di Vito, Head, BMO Retirement Institute and author of 52 Ways to Wreck Your Retirement… and How to Rescue It. "Whether you've been contributing to an RRSP for years or are just getting started, make sure you invest on a consistent basis, regardless of the amount."

Here is how an RRSP can work to your advantage:

The example below illustrates the difference in savings between an RRSP and a non-RRSP investment. The impact this has on your investments can amount to a substantial difference over time - over $320,000 in the below scenario.

	RRSP	Non-RRSP
Amount Invested Annually	$10,000	$10,000
Years Invested	30 years	30 years
Marginal Tax Rate	N/A	46%
Average Annual Return	6%	6%
Total Savings After 30 Years	$838,016.77	$510,717.60

BMO Financial Group's RRSP Savings Calculator can help take the guesswork out of contributing to your RRSP by taking you through a few simple steps that will put you on the path to retirement success. Access it at .

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