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The Companion Advisor: Retirement Planning
RSP Investing Strategies
Monthly Investing Works

Contributed by AGF Funds Inc.
A Companion Advisor Article

One of the best ways to maximize your RSP contribution each year is to set aside a specific dollar amount every month. Many people refer to this strategy as "paying yourself first". All you have to do is set up a monthly pre-authorized chequing plan. Your bank account will be debited on a monthly basis and the money directed to one or more mutual funds. You will be surprised at how quickly your retirement nest-egg starts accumulating. Consider the benefits of this strategy:

Easy to Budget

For most investors, investing in a mutual fund monthly is often the easiest way to budget for their maximum RSP contribution. After all, budgeting $417 a month can be much easier than contributing a lump sum of $5,000 once a year. And, if your earned income changes, you can simply adjust your monthly contributions accordingly.

Dollar-Cost Averaging Instead of Market Timing

Making monthly contributions, regardless of market activity, is called dollar-cost averaging. By buying mutual fund units at regular intervals, you will purchase more units when prices are low. Once unit prices trend upward, you will purchase fewer units each month but the units you already hold will increase in value. This disciplined strategy takes the guesswork out of investing.

You May End up With More

Monthly contributions get more money working for you faster than contributions made at year-end. Studies have shown that monthly investing can be more advantageous because your money is working for you throughout the year and you are purchasing more units when prices are low.

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