Clark Wealth Management Group - ScotiaMcLeod Fredericton

Including today, New Brunswickers have only 8 business days left to make that Registered Retirement Savings Plan (RRSP) contribution they can deduct against 2010 earned income. That’s not a lot of time and it will pass quickly. As a friend of mine says jokingly each Monday morning, “the day after tomorrow is Wednesday and we don’t have a darn thing accomplished”, so don’t delay.

While getting the contribution made (i.e. getting the money saved) is a very time sensitive item at this stage, deciding how the amount contributed gets invested is not something to be done in haste.

Good savers are not necessarily good investors. Investing successfully begins with a process involving setting some goals. Understandably, people have a good deal of difficulty setting long term goals like “retirement goals”. For many, retirement is simply too far away to seem important so it gets little to no attention.

For those people who can’t plan for something that will happen 15 or 20 years from now (and that may be most people), think 5 years out. Pretty much everyone can imagine and plan for the next 5 years. Don’t underestimate the power and effectiveness of setting goals for that relatively short period of time. Having a plan of any kind is far superior to simply thinking financially from month to month as happens now for many people.

With even the most basic financial plan in place for the next 5 years an investor can determine how much of a rate of return they require their investments to generate. That fact coupled with their tolerance for risk will get them a long way toward figuring out how to best invest their money. The part many people find daunting, choosing which specific investment vehicle to use from all that are available, while important is less critical.

The process involved can be likened to selecting a destination then planning the route and time it will take to get there. All would agree that it’s much more complex to plan a trip that will cover a great distance and take a lot of time (i.e. planning to retirement) than it is to take a weekend trip somewhere nearby.

Dealing with the bigger questions like “what level of income one can expect in retirement and from what sources” is important to do at some point in time. But for today, within the next 8 days get that 2010 RRSP contribution made and while you’re there make an appointment within the next month to meet with your banker or other financial advisor to determine how to invest the money effectively.

If you do these things, by the time you get to the point where you need to deal with the more difficult questions about retirement you’ll find that you’ll like the answers you get much better.

Keir Clark, is a senior wealth advisor, with Clark Wealth Management Group and branch manager at ScotiaMcLeod in Fredericton, NB. He can be reached online at www.keirclark.ca or by telephone at 506-450-6465.

Information and opinions contained herein have been compiled from sources believed reliable but no representation or warranty, expressed or implied, is made as to the accuracy or completeness.