RRSPs: Let Time Work in Your Favour

RRSP is one of the single best long-term savings vehicles available to you.  They offer significant tax advantages by allowing you to deduct your contributions from your income and can also generate a healthy tax return in the process.

The RRSP contribution deadline for the 2025 tax year is March 2nd, 2026.

For 2025, the contribution limit is $32,490, or 18% of your earned income from previous year; whichever is lower. Unused RRSP contribution room from previous years can also be carried forward. To check this amount, simply consult your 2024 CRA Notice of Assessment or log into your online CRA profile. You can contribute to your RRSP through online banking as well.

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Start Early

When it comes to building wealth through your RRSP, compounding is the secret ingredient that can transform modest contributions into substantial retirement savings.

Imagine rolling a small snowball down a hill. As it rolls down, it picks up more snow, growing larger and larger until it’s a massive snowball by the time it reaches the bottom. This is exactly how compounding works: the more it rolls, the more it gathers, expanding exponentially.

In financial terms, compounding is when your earnings, whether from interest, dividends, or capital gains generate even more earnings. Instead of just earning interest on your initial investment, you start earning on the interest you’ve already earned.

The sooner you start, the bigger your snowball!

Even small contributions can add up significantly over the years. Imagine you contribute $1,000 in an RRSP, growing at 5% annually. After one year, you’d have $1,050. In the second year, you’d earn five percent on the $1,050 you made, and not just the initial $1,000. This compounding effect is what accelerates the growth of your portfolio.

Start Now!

Start saving now and watch your wealth grow over time: thanks to the magic of compounding.

If you would like to discuss RRSP accounts or other investment accounts further, please reach out to info@capcorp.ca