It’s been said that Canada has five seasons – spring, summer, fall, winter and “RRSP season.” That’s how common it is for Canadians to make large contributions to mutual funds in their Registered Retirement Savings Plans (RRSPs) during the two months before the deadline.

Canadian income earners have 60 days into the new year to make RRSP contributions that reduce taxable income for the previous year. The deadline is March 1, 2023, to contribute to an RRSP for the 2022 tax year.

But calling these two months RRSP season is somewhat of a myth because the real RRSP season should be all year round. Ideally, this two-month period is a chance to top up your RRSP if needed, not a time to make a large lump-sum contribution.

Benefits of year-round mutual fund investing

When you invest monthly or every payday, you make manageable mutual fund contributions that won’t disturb your budget. Paying yourself first is easy.

Contributing on a regular basis is also a smart way to invest. You’re sure to be investing when markets are down and fund unit prices are lower, so you can profit when markets rebound. You’ll also be certain to participate in rising markets, without over-investing when unit prices are higher.

Drawbacks of a deadline contribution

Waiting until the deadline to make your contribution means coming up with thousands of dollars at once – not always an easy task. You also give your mutual fund investment less time to grow and compound. In addition, you may be hesitant about contributing a large lump sum if it’s a time the markets make you feel uncomfortable about investing.

Already contributing regularly to your RRSP?

If you currently make contributions all year round, you can take the benefits outlined above as confirmation you’re contributing wisely. You can ignore all of the RRSP season messages in the media, unless your RRSP can use a top-up.