Karim Moolani, 19, has already saved more $4,000 to put toward his retirement.
It’s no joke: These young savers will get last laugh
TheStar.com – Business -
Some are startled to see teen investors, but tax savings make it `a no-brainer’
January 18, 2007
He is only 19, but Karim Moolani is already busy saving up for his retirement.
Aside from trading stocks, the third-year-business student has been carefully putting away money in his RRSP account, which he opened last year.
Already he estimates his RRSP savings at $3,000 to $4,000.
It’s this type of behaviour that experts like Howard Kabot, Scotiabank’s national director of financial planning, hope to see more of.
“The earlier start the better,” said Kabot. “We hear that talked about all the time but you just can’t say it enough because I don’t think younger people really understand that. The more you can put away earlier, the more you are going to have and the reason for that really is the effect of compounding growth.
“An extra 10 years’ head start can really make a difference.”
Currently, most of Moolani’s money comes from the summer months when he is busy working at his computer and holdings companies.
“A lot of young people don’t do it, but you sort of have to have the mindset that you are investing for your future,” said Moolani, a student at the University of Western Ontario’s Richard Ivey School of Business.
For Moolani, the idea to invest early came from his family.
“My parents definitely encouraged planning for the future and starting early.”
And apparently, Moolani is not alone. A recent study by RBC reports that 62 per cent of those between the age of 18 and 34 now hold RRSPs. The study reported this figure is up from 44 per cent five years ago.
But still, it does seem this group is not as large as previously perceived. A recent study by Desjardins Financial Security suggests that though age 60 is the average, ideal age of retirement for surveyed workers, more than one-third of workers and partial retirees indicated that they didn’t seriously start saving for retirement until they were more than 40 years old. In fact the study shows that the average age to seriously start saving for retirement is 35.
Young people can start investing in RRSPs when they start their first job, whether it be babysitting or delivering papers, Kabot said.
“Even if you don’t have the ability to contribute to a RRSP, younger people will often not have money of their own, they should file a tax return during the year that they have earned this income so that will give them the right in the future to contribute to their RRSP.”
For those who have delayed filing their tax returns, Kabot said not to worry since people can go back at least three years.
“That room you create never goes away, if you are 14 years old and file a tax return, and if you get your first (full-time) job when you are 25, you would be able to put money in the RRSP as a result of the paper route you had when you were 14.”
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