t's that time of year again, the kids have returned to school, the trees are changing color and tax saving strategies are the furthermost item on your mind. As we enter the last quarter of 2000, reality will set in and you will surely begin to think about ways to reduce the amount of income tax you will pay this year.
People often put off their RRSP contribution until late January or February of the following year. After all this is the deadline, and most of us feel we work better under pressure and choose to procrastinate. In addition to stress, this last minute strategy can lead to panic and frustration about your decision.
You can reduce some of the tension by planning ahead. Here is a simple strategy that many Canadians are using. It's called a PAC (pre-authorized cheque) plan. A PAC is an order to purchase mutual funds on a monthly basis. You simply complete paperwork requesting your bank release a certain dollar amountto the fund company of your choice. Most companies permit as little as $50 for a monthly purchase.
The PAC plan is very flexible. You can increase, decrease or stop you monthly deduction at any time. You can change the funds you buy or alter the date for your withdrawal. A PAC also helps when there is a lot of market fluctuation. Rather than making one lump sum purchase at the end of the year, you make twelve purchases at different prices throughout the year. Time is running out for the year 2000, but it's not too late to start your PAC for future years. Consult with your financial planner to learn about all the advantages of starting a PAC plan today.
This is a monthly article on financial planning. Call or write to Rick Sutherland CLU, CFP, R.F.P. with your topics of interest at 798-2421 or e-mail at rick@invested-interest.ca