What are the benefits of a GRSP?

There are four main benefits to GRSPs.

1) Instant tax deductions
With an individual RRSP, you have to wait until tax time to deduct RRSP contributions from your annual income tax. When you contribute through a GRSP with pre-tax dollars, you get those savings immediately, which means the government isn’t hanging onto money that actually belongs to you.

Because of these deductions, GRSP contributions also tend to be less noticeable for your monthly cash flow than if you deposited the money yourself. Let’s say you make $1,000 a month and your tax rate is 20%. Normally, you would take home $800 after taxes. But if you’re contributing 5% of that monthly pay to a GRSP ($50), that means you’re only paying tax on $950. So now you’re taking home $760. You’re contributing $50, but you only see a decrease of $40 from your take home pay.

2) Easy contributions
Another benefit of GRSPs is that the contributions are automatically deposited from your paycheque at the source, before it even hits your bank account (and before you have the chance to spend it). You don’t have to decide to contribute to your RRSP every month – it happens without any effort.

3) Automated portfolios
Wealthsimple uses a combination of our expert investment research team, licensed portfolio managers and automated technology to do all the work required to manage your investments. That means you don't have to worry about which funds to invest in, trying to time your trades to the market or rebalancing your assets. All of the investing is done for you!

Plus, low-cost investment options are a key part of our investment approach, which means you get to keep more of your contributions than with actively managed funds.

4) Free money
If your employer is offering a base and/or matching program, they are basically offering you free money. Never turn down free legal money. Two sources funding your long-term savings is better than one, and will help you grow that nest egg bigger and faster.