TORONTO, ONTARIO — (Marketwire) — 11/25/11 — To mark Financial Literacy Month, which was launched by Finance Minister Jim Flaherty, BMO is releasing a series of financial tips throughout November. As part of Making Money Make Sense and BMO SmartSteps, BMO-s tips are designed to help individuals and families save and manage their day to day finances more effectively.
BMO-s Tip of the Day: Consider taking out a loan to maximize your contribution to your Registered Retirement Savings Plan (RRSP) and take advantage of the tax benefits
Borrowing money allows you to increase your RRSP contribution for the year. Many financial institutions, including BMO Bank of Montreal, offer a variety of low interest loan options specifically for this purpose.
“Taking out an RRSP loan can make sense if you have accumulated a significant amount of unused RRSP room because it allows you to maximize your contribution,” said Tina Di Vito, Head of the BMO Retirement Institute and author of the recently released 52 Ways to Wreck Your Retirement… and How to Rescue It. “However, a general rule of thumb is to only borrow if you-re confident you are able to repay the loan within one year.”
Ms Di Vito advises that, in order to avoid borrowing on an annual basis, a simple strategy worth considering is to pay off your loan within six months, and then redirect those payments to your RRSP instead. That way, when the deadline comes, you have already made your annual contribution and have saved money in interest payments.
BMO Financial Literacy Month Tips
: Pay more than the minimum payment on a credit card balance.
: Choose a shorter amortization for your mortgage.
: Contribute to a child-s Registered Education Savings Plan (RESP) as early as possible.
: Invest in a Tax-Free Savings Account (TFSA) to maximize your savings.
: Switch to weekly mortgage payments to save interest and become debt-free faster.
: Take advantage of credit card travel insurance to lower costs.
: Start early and contribute often to your investment account, rather than waiting to invest.
: Use a line of credit to consolidate high-interest debt and save on interest costs.
: Canadians can give the gift of securities and benefit at tax time.
: Students, pay off your credit card balances and take advantage of student discounts to save money.
: Pay an extra five per cent on your mortgage every year to reduce interest costs.
: Secure your retirement by starting to save early and taking advantage of compounding growth.
Students can save money by ensuring they are in a no-fee student banking plan.
: The Registered Disability Savings Plan (RDSP) is a powerful investment option that can offer long-term financial security for persons living with a disability.
: Maximize your Old Age Security (OAS) benefits by adopting the right tax strategies.
: Stress-test your mortgage to ensure your housing costs are affordable.
: Take advantage of Canada-s numerous online personal finance resources.
For more on financial literacy, BMO encourages Canadians to visit and .
Contacts:
Media contacts:
Amanda Robinson, Toronto
(416) 867-3996
Sarah Bensadoun, Montreal
(514) 877-8224
Laurie Grant, Vancouver
(604) 665-7596