Start Early

The earlier you start investing in an RRSP, the better off you will be. Why? Because an early start means the income earned in your RRSP has more time to compound.

No minimum age

And with RRSPs, there’s no minimum age to start investing. As long as a Canadian has employment income and files a tax return, they (or their guardian) may set up and contribute to an RRSP.

Simply put, investors who start earlier can make a smaller total investment in their RRSPs and still be farther ahead than those who make a larger total investment but start later.

For example:

Steve, age 30

• Contributes $1,000 a year until age 65*
• Earns 6% average annual compounded return
• Total RRSP investment of $36,000
• Total worth of RRSP at age 65: $126,268

Ted, age 45

• Contributes $2,000 a year until age 65*
• Earns 6% average annual compounded return
• Total RRSP investment of $42,000
• Starting Early   Total worth of RRSP at age 65: $84,785

At age 65, Steve’s RRSP is worth significantly more than Ted’s because Steve’s RRSP had more time to compound.

*Assumes contributions made at the beginning of each year.