With the March 1 deadline for contributing to a registered retirement savings plan (RRSP) fast approaching, many Canadians are stressed as they scramble to find the money to make a contribution, according to a BMO survey.
While three-quarters of Canadians with an RRSP have already made or plan to make a contribution to their RRSP before the deadline, 60 per cent admitted the deadline causes them stress.
This may be related to the fact that almost one-half (49 per cent) of the 1,000 survey respondents rely on making a lump sum contribution to their RRSP at the end of each year, rather than investing smaller amounts on a regular basis throughout the year.
However, more than one-half (54 per cent) said they would feel less stressed if they switched their approach and made smaller contributions throughout the year.
A continuous savings plan — which automatically withdraws a specific amount of money from an individual's bank account and invests it directly into his RRSP — can help increase savings, according to BMO. For example, since mutual funds fluctuate in value based on market conditions, by investing the same amount in a fund each month, an investor can buy more fund units when the cost is lower. This can reduce the average price per unit an investor pays over the long term, it said.
When informed about the benefits of a continuous savings plan, two-thirds of Canadians said they would be more likely to use one in the future.
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