What is an RSP Account? 5 Features You Should Know

Looking for a secure way to grow your retirement savings in Canada? An RSP account can be a great option. Read this post to know some of the top features of this savings account.

When it comes to retirement, every Canadian wants to live it in their unique ways. But one thing that remains common in everyone’s dream retirement is the need for adequate savings. While the primary source of income might cease to exist after retirement, the expenses continue throughout life.

Thus, to live a comfortable retirement of dreams, you should start planning and saving as early in life as possible. An RSP (Retirement Savings Plan) account could abundantly contribute towards this long-term retirement goal.

Here are some of the top features of an RSP account-

  1. No Fixed Maturity Period

Most retirement investment options in Canada have a fixed maturity period wherein the invested amount is locked for the duration and is inaccessible. While there can be options to withdraw the investment before maturity, premature withdrawal generally attracts hefty penalties.

An RSP account eliminates this concept of maturity or lock-in period. It is an investment-cum-savings account where one is allowed to deposit and withdraw the funds as and when required without worrying about any fixed maturity or penalty.

  1. Earn Monthly Interest

One of the most valuable benefits of an RSP account is that it generates monthly interest. Based on the balance you maintain in the account, the bank will calculate the interest and deposit the same at the end of the month.

While the interest rate can vary between banks, some banks in Canada offer as much as 0.50% p.a. on their RSP account.

  1. Zero Administration Charges

Most investment options and even savings bank accounts in Canada have administration charges or fees that are paid on a monthly or yearly basis. These are additional investment costs that affect your returns.

RSP accounts generally do not have administration charges. This means that you get to keep the entire interest income that your RSP account generates. But do check the terms and conditions of the bank you select to confirm the same.

  1. RSP GIC for Higher Returns

If you want to invest for a fixed tenure and earn a higher rate of interest, you can also consider RSP GICs (Guaranteed Investment Certificates) offered by some of the top banks. With GICs, you get highly competitive interest rates to further boost your retirement savings.

You can invest for a tenure ranging from 1 year to 5 years, and the interest income is compounded annually until maturity. By combining GIC with RSP account, you can get closer to the retirement of your dreams in a safe and hassle-free manner.

  1. Apply for RSP Account Online

For enhanced convenience, some banks allow customers to apply for an RSP savings account online. By simply filling an online account opening form and submitting the required documents, you can have a new RSP account ready to use within 3-5 working days.

You can also visit the nearest branch or contact the support team of your bank to know more about the RSP account and its application process.

Grow Your Retirement Savings Securely with an RSP Account

While there is no shortage of investment options in Canada, only a selected few are risk-free. If you are a risk-averse investor wanting to invest for your retirement, an RSP account can be an excellent option as it offers a combination of safety and high returns along with complete flexibility to deposit and withdraw your funds anytime you like.

Make sure that you do consider factors like the reputation of the bank, interest rate, customer support, and additional facilities while opening an RSP account to get maximum benefits and complete convenience.

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