|
By Brian Lewis
RRSP Special Feature
The Province, February 07, 2001
When young adults decide to start a Registered
Retirement Savings Plan, they should approach
the task in the same manner Mother Nature had
them start out in life - crawl first, then walk.
"Above all else, keep the RRSP starter portfolio
simple for the first few years," says financial
advisor Adrian Mastracci, owner of Vancouver-based
KCM Wealth Management Inc. "Don't get sidetracked
by chasing the hottest mutual funds from the previous
year or other sophisticated investments you may
not fully understand."
"It's okay to park the RRSP money in GIC's or
Canada Savings Bonds for the first little while."
That's an RRSP starter strategy that has worked
well for Coquitlam graphic designer Harv Craven.
The 28-year old has been making monthly contributions
to his RRSP for six years now and he recently
used those savings under the federal government's
Home Buyers' Plan for a down-payment on a new
home for himself and his fiancée.
Under the plan, first-time home buyers can withdraw
up to $20,000 tax-free as a loan from their RRSP's
for a downpayment. The loan must be repaid, without
interest, over 16 years.
"The RRSP has already helped us get our first
home and now we're building the RRSP up again,"
Craven says.
He started his RRSP as soon as he landed his
first job in graphic design after finishing school.
"I saw some interesting graphs that showed the
difference in starting RRSPs early and that got
a few wheels turning in my head," Craven recalls.
"But I knew absolutely nothing about investing
when I started and even now while I'm keen to
learn more about the subject, I'm more interested
in just making the contributions," he adds.
"I'll do more sophisticated investing down the
road when I've learned more about it."
Mastracci says he finds too many young adults
spend more time than they should worrying about
the kinds of investments they want in their plans.
"You don't need a grandiose plan or sophisticated
investment when you start out," he says. "Just
get the money into the plan."
"Then, if you can, use your tax return this spring
to start your RRSP contributions for 2001.
"As a young person you have got plenty of time
to save for retirement so don't worry about building
your nestegg quickly - spend the first few years
getting used to contributing to an RRSP and learning
as much as you can about investing," Mastracci
said. It also may be wise to wait until after
all the RRSP season's hype has died down before
making a more permanent investment in the RRSP
portfolio with the money you've already contributed.
You'll have had a chance to think things over,
and brokers or advisors will have more time to
serve you.
Also, seriously consider changing your planning
and start making regular monthly contributions
to your RRSP.
|
