The “RRSP Season” has come and gone, and tax-time is upon us. It is the perfect time for forward thinking. Tax planning is an on-going venture, though many people wait until the last minute to look for tax savings ideas. This year, why not plan ahead?

When you receive your Notice of Assessment, take a look at your RRSP contribution limit for 2004. Many people are letting this allowance grow without taking advantage of this valuable tax and retirement planning tool. Don’t wait until the end of the year to make a last-minute lump-sum contribution. A better way is to build your RRSP into your budget with a monthly contribution program. You can even set up a plan with bi-weekly or twice a month deposits to co-ordinate with your pay cheque.

There are benefits using this method. First of all, you have all year for your investment to increase in value. Each purchase you make will earn interest or growth. If you save regularly your total amount saved is potentially greater than if you waited until the end of the year.

With our current low interest rate environment many people are choosing mutual funds as their preferred RRSP vehicle. This brings up a second benefit. You can profit from dollar-cost averaging. By investing the same amount of money at regular intervals, you automatically buy more shares when the price is drops. Generally, this helps to overcome any short-term market volatility. You could end up with more shares with a lower average cost following this process.

Mutual fund companies allow you to invest automatically through pre-authorized chequing plans, which you can set to almost any frequency. The money is withdrawn at the specified time, allowing you to "pay yourself first". So this year, don't put it off until the last minute. Consider making regular systematic contributions to your Registered Retirement Savings Plan and let your money work for you.

This is a monthly article on financial planning. Call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., of Fundex Investments with your topics of interest at 798-2421 or E-mail at rick@invested-interest.ca.