Psst: Want to earn a sure 50% on your money?
While "Earn 50% On Your Money!" may be a tag line you'd expect to see in the back pages of magazines your mother told you not to read, it actually has a ring of truth.
At least it does for those who take part in pension or RRSP contribution matching programs set up by their employers.
Many employers offer a subsidized RRSP program, meaning they will match employee contributions up to a certain dollar or percentage limit, ranging anywhere from 25% to 100%, depending on how long you've worked there.
Talk about free money. Not signing up is akin to simply leaving some of your salary on the table every month. Nonetheless, industry figures suggest that roughly 40% of eligible employees simply never get around to participating.
Look at it this way: If your boss came to you and said, "I want to give you a 3 or 4% raise," would you turn it down? I doubt it.
The biggest hurdle to overcome is usually the plan's complexity, of course. New hires are often handed an intimidating package from HR that then refers them to an opaque third-party website. In other words, you're expected to figure things out yourself.
But those subsequent investment decisions have nothing to do with whether you should sign up or not once you're eligible. Sure, the fund fees can be pretty high but you're still accessing money that you wouldn't otherwise see.
Or is simply that you don't trust the folks you work for?
Do you have an RRSP matching program where you work? Are you in? If not, why not?
By Gordon Powers, MSN Money
Posted by: Jack | Sep 28, 2021 7:32:49 PM
My company has an RRSP matching program. They also have a plan where you buy company stocks and they match that as well. I have maxed out my contributions to both plans. I would be a fool not to.
Posted by: be careful | Sep 28, 2021 8:06:15 PM
There's a big difference between loading up on company stock and professionaly managed RRSP program. Both can work but the former carries a lopt more risk ... just ask the Nortel guys now doing landscaping.
Posted by: Jack | Sep 29, 2021 12:43:05 AM
@be careful, that would be unlikely, as I work for the largest oil company in the world. I also cash in the stocks regularly and re-invest in other stocks, real estate, partnerships, etc. I know people in other companys that have all of their investments tied up in their company. This is an unnecessary high risk. There is always risk with investments, some more than others, and it can be managed. If I had taken the safest route, I would not have the wealth that I have today. I have weathered the worst of economic times very well. I do not put all of my eggs in one basket. Maybe I can hire some of those Nortel guys to do my landscaping.
Posted by: Eman | Sep 29, 2021 8:17:44 AM
My company offers the RRSP matching program too and I am one of the luckiest to have my contributions matched up to 6% and discounted stock options too... did I say it out loud that I love free money
Posted by: Betty Johnstone | Sep 29, 2021 11:36:00 AM
Sounds good until you find the company has filed for bankruptcy - like Nortel. We have lost significant funds and it is still being settled. Lost paid up life insurance, survivor pension, and regular pension will cease. How do you come back from that?
Posted by: 4wildlife | Sep 29, 2021 10:49:24 PM
You don't! You just start another life.
Posted by: Energy Girl | Sep 30, 2021 11:55:00 AM
I work for a utility company. We have a matched RRSP (5.75%) and I'm not sure we you can contribute less than that here. I certainly contribute that amount and an extra voluntary amount. We also have a shares plan. The company gives us an interest free loan to come out of future paychecks to contribute up front to shares. They also add in an extra 10% on top of that. I'll be getting in on the shares program as soon as my student loans are all paid off next year.
Posted by: Q | Sep 30, 2021 1:00:57 PM