Building a retirement pool is a long-term investment. The Canada Revenue Agency (CRA) takes a 5.95% contribution from your salary for 20 years to build you a pool that can pay 30% of your last generated income. In a Canada Pension Plan (CPP), you do not have the option to choose where to invest. Neither can you withdraw from CPP. If you show a similar dedication and invest only 5% of your income in a few dividend stocks, you can generate a higher pension and live a wealthy retirement.
How Canadian stocks can generate retirement wealth
I chose a Registered Retirement Savings Plan (RRSP) for three reasons.
- Firstly, it allows you to deduct the invested amount from your taxable income. An incentive like this will encourage you to invest.
- Secondly, it allows your investment to grow tax-free, which means compounding returns will not be diluted by taxes.
- Lastly, early RRSP withdrawals are subject to withholding tax, which will discourage…
