Fewer than half (41 per cent) of Canadians are putting money in an investment vehicle such as a registered retirement savings plan or a tax-free savings account, according to a new survey by BMO Financial Corp.
The survey, which polled 1,500 Canadians, also found 59 per cent of respondents are simply putting money in their savings accounts and leaving it in cash. “Although a majority of Canadians are saving, most are not taking advantage of the additional returns that investments can provide,” said Robert Armstrong, vice-president of multi-asset solutions at BMO Global Asset Management, in a press release. “Consider investing a small amount each month through a continuous savings plan, which makes automatic and consistent contributions to your investments throughout the year.”
When it comes to not investing their savings, the top reasons listed by respondent include not having enough money to do so (44 per cent), paying off debt (25 per cent) and having other things to spend money on (21 per cent).
As well, 40 per cent of respondents said they’ve made a withdrawal from their RRSP, with the average amount up to $20,952 in 2017, $3,739 more than the year before. Reasons for doing so included purchasing a home (27 per cent), living expenses (23 per cent), emergencies (21 per cent) and to pay off debt (20 per cent).
“We’ve seen a steady increase in the amount of money Canadians are withdrawing from their RRSPs to meet short-term needs; this should be considered only as a last resort,” said Armstrong. “There are tax consequences associated with withdrawing from your RRSP, so be sure to consult a financial professional to ensure you have exhausted all other options that may be available to you.”
The highest percentage (45 per cent) of Canadians who have made a withdrawal from their RRSP is in the Prairies, though that region has the lowest average withdrawal at $12,374. The highest average withdrawal ($23,5050) is in Atlantic Canada, where 41 per cent of people have made a withdrawal.