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REPEAT-BMO Study: TFSAs Gaining Ground While RRSPs Remain

REPEAT-BMO Study: TFSAs Gaining Ground While RRSPs Remain Popular
Among Canadian Investors 
- More than 40 per cent of Canadians would choose to invest extra
money in a TFSA; 37 per cent in an RRSP  
- Tax-free nature and anytime withdrawal from a TFSA seen as biggest
benefits  
- TFSAs and RRSPs can work together to help investors achieve their
financial goals  
- BMO offers limited time TFSA and RRSP promotions to encourage
Canadians to save and invest for their future 
TORONTO, ONTARIO -- (Marketwire) -- 01/19/13 -- With the annual
deadline for contributing to a Registered Retirement Savings Plan
(RRSP) fast approaching, many Canadians are wondering whether they
should invest solely in an RRSP or split their investment dollars
between an RRSP and a Tax-Free Savings Account (TFSA). While the two
investment vehicles complement each other and boast impressive
adoption rates among Canadians, a BMO study has found that many are
intrigued by the TFSA, in particular. 
According to the national study: 


 
--  Two-thirds (67 per cent) of Canadians have an RRSP and 39 per cent have
    a TFSA. 
--  If they were given a limited amount of money to invest, 42 per cent of
    Canadians would invest the funds in a TFSA while 37 per cent would put
    it towards a RRSP. 
--  The most attractive TFSA benefits cited were that investments are tax-
    free (36 per cent) and that funds can be withdrawn at any time (20 per
    cent). 

 
"Whether saving for travel, the purchase of a home, a child's
education or retirement, it's encouraging to see that Canadians are
investing in their future by contributing to TFSAs and RRSPs," said
Serge Pepin, Vice President, Investment Strategy, BMO Asset
Management Inc. "Both programs play important roles in helping
Canadians save and invest in a tax-efficient manner. They complement
each other and should be used in unison, so it's important that
investors understand their differences." 
Mr. Pepin noted that a TFSA allows Canadians to easily earn tax-free
investment income to meet their savings needs. Key benefits of this
registered plan include: 


 
--  No minimum contribution required to open an account 
--  Investors pay no income tax on investment returns earned in the account 
--  There are no taxes on funds that are withdrawn 
--  TFSAs can hold a wide range of investments 
--  The federal government recently raised the annual contribution limit for
    a TFSA from $5,000 to $5,500 

 
An RRSP, on the other hand, is a tax-deferred savings vehicle that is
designed specifically to help Canadians save for their retirement. An
RRSP is also a wise investment tool because: 


 
--  Investment growth is tax-free until withdrawn, meaning retirement wealth
    has the potential to grow faster than if invested outside an RRSP 
--  Contributions to an RRSP are typically tax deductible, lowering annual
    taxable income and income taxes payable 
--  RRSPs can hold a wide range of qualified investments 
--  Funds can easily transition to retirement income 
--  Spouses can split income to reduce their combined taxes payable 

 
"Ideally, Canadians should be contributing to both a TFSA and an RRSP
because they each offer distinct advantages," added Mr. Pepin.  
BMO offers Canadians special, limited time TFSA and RRSP promotions 
To encourage Canadians to boost their savings and invest for their
future, BMO has introduced special offers on TFSA Savings Account
deposits and RRSP contributions: 


 
--  Until April 30th, 2013, BMO is offering a 2.25 per cent interest rate on
    net new deposits to a BMO TFSA Savings Account - the highest rate
    currently offered by a major financial institution in Canada. 
    
--  Until March 1st, 2013, if you set up and maintain a new RRSP continuous
    savings plan in your BMO mutual funds account for 12 months, you will
    receive a one-time 15 per cent bonus on your first month's contribution
    (up to a maximum of $150).  

 
For more information on the TFSA, please visit: www.bmo.com/TFSA. 
For more information on the RRSP, please visit:
www.bmo.com/Retirement. 
Get the latest BMO press releases via Twitter by following @BMOmedia. 
The Pollara online survey was completed between October 11 and
October 16, 2012, with a sample of 1,000 Canadians. A probability
sample of this size would yield results accurate to +/- 3.1 per cent,
19 times out of 20. 
BMO Mutual Funds are offered by BMO Investments Inc., a financial
services firm and separate legal entity from the Bank of Montreal. 
Commissions, trailing commissions, management fees and expenses all
may be associated with mutual fund investments. Please read the
prospectus of the mutual fund before investing. Mutual funds are not
guaranteed, their values change frequently and past performance may
not be repeated.
Contacts:
Media Contacts:
Rachael McKay, Toronto
416-867-3996
rachael.mckay@bmo.com 
Valerie Doucet, Montreal
514-877-8224
valerie.doucet@bmo.com 
Laurie Grant, Vancouver
604-665-7596
laurie.grant@bmo.com 
Internet: www.bmo.com
Twitter: @BMOmedia