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Increase Your “Credit” with RRSP and TFSA Planning Advice
In a world where money is moving faster than ever, financial advisors increase their “credit” with their clients by building trusted relationships through personal service, knowledgeable advice, and being there when your clients need you.
After all, you’re doing more than just handling their money. You’re the custodian of their plans, dreams, and goals for their future and those of their family.
Carte Wealth Management believes in the same customer service values you do, and that includes providing clients with these important tips for RRSP and TFSA contributions.
Don’t Wait to Recommend RRSP Contributions
People tend to think about making RRSP contributions when the deadline is almost here. Part of a sound financial strategy is to plan and budget RRSP well ahead of time, particularly before the holiday shopping season since the contribution deadline falls so soon after holiday bills become due.
Clients can confirm their allowable contribution limit by checking the back of their Notice of Assessment from Canada Revenue Agency (CRA). It’s important to remind them to bring this document in when you’re reviewing their financial plan.
When to Make TFSA Contributions
You can contribute to a Tax-Free Savings Account (TFSA), anytime, but a great rule of thumb to follow is to maximize your clients’ RRSP before the contribution deadline, and deposit as much of your income tax return as possible into your TFSA.
Although there are no tax benefits for the actual contribution, dividends and income generated by the investments within a TFSA are tax-free. You can also make no-cost withdrawals if you need fast access to money.
Borrowing to Make RRSP and TFSA Contributions
What if your clients don’t have the funds to contribute to their RRSP this year? A good option might be to take out an RRSP loan. RRSP loans are becoming popular choices for clients, and offer variable or fixed rate interest rate as well as flexible solutions to match every scenario. 6-month repayment deferrals are also available, so your client can pay back their loan with their tax refund while still reaping the RRSP tax benefits.
The same types of loans are available for the TFSA. In both cases, we can help you decide if it’s better for your client to borrow or use their own savings to make contributions.
CARTE Wealth Management Services in Mississauga, Toronto, and the GTA
If you have any questions about these strategies, contact us today!
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Carte Wealth Management