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Investing early

What would you say if we told you that you could accumulate greater savings for retirement by investing less? Interesting?! It is actually possible! The secret lies in the age at which you begin your savings program.

Take the example of Mary and Peter. Both plan to retire at 65. Assuming they earn the same return on their investment, 6% compounded annually. Investments are made within an RRSP account (We would obtain the same result within a TFSA account).

Mary was able to put away $ 2,500 annually between the ages of 20 to 31. She then stopped her annual savings until retirement. Consequently, she committed $30,000 of her own money overall.

For his part, Peter was not able to save in his younger years. Rather, he began an annual savings program of $ 2,500 at the age of 32, which ran to 65 years old, for a total invested of $ 85,000.

Based on the above, who do feel will have accumulated the most money within the RRSP? We invite you to look at the table below. The results may surprise you…




Value of the RRSP at age 65



Total Contributions



Capital Growth



Mary, by investing a small fraction (i.e. 35%) of the amount invested by Peter, stands to profit from a much larger amount into retirement. The reason is simple… she allowed time to work in her favour… Would she have continued her annual investment of $2,500 through retirement; her RRSP savings could have reached as high as $ 600,247. Food for thought.


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