Briefly:

(March 6, 2008) Another poll has come out saying most Canadians aren’t investing in their RRSPs. This time Investors Group is reporting that only 37% of eligible Canucks made contributions during the 2007 tax year.

To make matters worse, RRSP contributions have decreased 5% from last year. Among those who did pay into their savings plans, 83% invested the same or more than they did in 2006.

“Many Canadians seem to have taken a ‘wait-and-see’ approach due to current volatility in the stock market,” says Debbie Ammeter, vice-president, advanced financial planning support at Investors Group. “Delaying your RRSP contribution while you wait for more favourable conditions may seem logical at the time, but it actually costs you money in terms of lost investment days.”

The IG poll also found that 26% of those surveyed chose to “park” their RRSP contributions this year by investing in short-term and typically low-risk, low-return vehicles such as bonds and money market funds. Half of those who park the funds do so for more than a year and a half, while the other 50% do it for less than 12 months.

The company says “parking” can be a short-term solution in some cases, but more often than not, it hurts investors in the long run.

“Parked funds are like an idling car — they’re in neutral and not earning the return they should,” says Ammeter. “Left unattended for even for a short period of time, they’re a missed opportunity, one that underscores the importance of working with a financial planner to develop a longer-term investment strategy.”

The survey also found that 53% of Canadians who made an RRSP contribution spoke to a financial advisor about their savings plan.

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CGA offers updated tax guide

(March 6, 2008) As much as Canadians loathe doing tax returns, they love getting their refund cheques in the mail. To make it easier to determine how much cash a client will get back, the Certified General Accountants Association of British Columbia has put out its updated reference guide to tax and RRSP issues.

The new edition — Personal Tax Planning 2007/2008 — includes a recap of major 2007 federal and provincial territorial changes affecting individuals, investment income and expenses, income splitting and current tax laws, regulations and trends for tax planning.

(03/06/08)

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.