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(Ben Blankenburg)
(Ben Blankenburg)

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Hesitating to make an RRSP contribution? Add to ...

If you still haven't made your RRSP contribution, you're not alone. Over the past five weeks, we've heard from Canadians of every stripe who are hesitating to write the cheque, for many reasons. Should I pay down my mortgage or other debt first? What about a TFSA instead? OK, I'm willing to do it, but how do I even start figuring out where I should be investing my RRSP money?

If you're still on the fence, take the leap of faith, says Patricia Lovett-Reid, senior vice-president at TD Waterhouse Canada Inc. She looks at some hurdles to contributing -- and how to overcome them.

1. You're carrying debt. You don't need to be debt-free to start saving for your future. "If you do a bit of both, paying down debt and saving for your retirement, you will likely be better off in the long run," Ms. Lovett-Reid says.

In fact, here's an interesting article that explains how you can even use your RRSP to pay down your debt:

  • You can do what with an RRSP?

2. You don't have money to make a contribution. "Consider borrowing to invest in your future," she says, because your investments can grow without being taxed immediately.

But be careful. If you want to read more about the possibility of borrowing to invest, take a look at John Heinzl's Investor Clinic columns:

  • Beware of phony math when borrowing to invest
  • The RRSP ‘refund’ fallacy

3. It's almost the deadline and you don't have much money set aside. "Make a contribution, no matter how small, before the deadline," Ms. Lovett-Reid says. "But next year, don't wait until the last minute. Take advantage of a pre-authorized purchase plan and see how regular investments can compound over time."

To learn more about compound interest, check out:

  • Want $1-million for retirement? Start here

4. Why bother? Small contributions don't add up to much. Don't believe it. "Every dollar counts: Even if you don't have much discretionary income, it's still worth contributing. Through the power of compound interest, you may have generated more savings than you expect when it's time to stop working," she says.

  • Seven tips on how to save more money
  • Excuses for not making RRSP contributions

5. You don't know exactly how you want to invest your contribution. "Contribute now and decide what to invest in later," Ms. Lovett-Reid suggests. You can temporarily park your money in a cashable GIC or a daily interest savings account before the deadline, and then take the time to decide exactly what you want to do with it. "Don't forfeit the tax incentive by waiting for next year simply because you can't decide how to invest."

If you're looking for some direction on where to invest, here's some more advice from Globe columnists:

  • Top eight picks from four mutual fund watchers
  • Top ETF picks for your RRSP
  • 12 pointers for building a solid RRSP portfolio
  • The best funds to hold in your RRSP
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