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The advantage of starting early

The advantage of starting early

Posted on: December 22, 2011
Author: Chris Turchansky, CFA, President, ATB Investor Services

Small contributions can get you on your way, especially if you start early.

When you’re 20 and retirement is 40-plus years away, putting $100 per paycheque into an RRSP probably isn’t a priority. But for a young person, time is your biggest ally when it comes to retirement savings.

The time factor

A little extra time can make a big difference. Here’s an example:

Mary was a real go-getter and started her RRSP when she was 25. Her contributions each year were $2000, but at age 35, her priorities changed and she stopped contributing to her RRSP. Over a 10-year period, her total contributions were $20,000.

Want to see how much you could save if you start early?

Try out our Early Investing Calculator.

Mary’s twin brother John took a different approach and didn’t open an RRSP until age 35. Like Mary, John contributed $2000 per year, but unlike Mary, he kept up with those contributions until he retired at age 65.

John contributed for 30 years, while Mary only contributed for 10. Surely, John must have more savings, right?

Wrong. Assuming both RRSP accounts grew at 8% per year with no fluctuations, Mary’s RRSP is worth $356,956 at age 65, while John has just $220,975.

As you can see, the amount of time you hold the investment is key. Even small contributions can get you on your way, especially if you start early.

When you are ready to take advantage of an early start on your investment plan, visit to create your plan. It only takes about 20 minutes.

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