By Allison McDonald-Sordo, Investment Advisor TD Waterhouse Private Investment Advice

Investing in a Retirement Savings Plan (RSP) offers many benefits, but two often stand out. One, your annual RSP contribution can reduce the amount of tax you pay in that year. And two, the money you put away has years of tax-deferred growth potential. Above all, have a plan:

1. Start a regular purchase plan. Make investing in your RSP easy by investing weekly, bi-weekly, or monthly instead of contributing to your RSP in a lump sum once every year.

 2. Use your tax refund wisely. Rather than spending your tax refund, consider paying down your loans, credit cards or mortgage.

 3. Maximize your RSP contributions. Your contribution limit is 18% of your previous year’s earned income, to a maximum of $21,000 for 2009 and $22,000 for 2010, less any applicable pension adjustment.

 4. Develop a long-term investment plan. For that, consider finding help from a professional investment advisor.

 5. Diversify your portfolio between safety, income, and growth. Your Investment Advisor can help you make sense of these issues.

 6. Name your spouse as the beneficiary of your RSP. The assets in an RSP can be automatically transferred tax-free to your spouse’s plan, avoiding probate fees and income taxes.

 7. Consider your spouse’s RSP. Income splitting can reduce your household’s total payable income tax.

 8. Get your RSP contribution out of “park”. Every year, many Canadians “park” their planned RSP contributions in money market funds or other short-term investments, rather than investing for the long-term immediately. The sooner you decide, the sooner your money starts working harder for you.

If in doubt, start a conversation with a professional Investment Advisor about your long-term financial goals. It is never too soon to put a winning RSP investment strategy in place.

This article was prepared by TD Waterhouse Private Investment Advice for Allison McDonald-Sordo who is an Investment Advisor with TD Waterhouse Private Investment Advice and is for informational purposes only. It is not an offer or solicitation with respect to the purchase and sale of any investment fund, security or other product and does not provide individual, financial, legal, investment or tax advice. Please consult your own legal and tax advisor. TD Waterhouse Private Investment Advice is a division of TD Waterhouse Canada Inc., a subsidiary of The Toronto-Dominion Bank. TD Waterhouse Canada Inc. – Member CIPF. TD Waterhouse is a trade-mark of The Toronto-Dominion Bank, used under license.