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New immigrants find RESP / RRSP an alien concept
Vijay Sappani left India and arrived in Canada with $7,000 in savings. He went to college and later entered business development. Sappani can compare his new country with the one he left. Everything from climate, to food, to clothing is different. Including financial planning.
In India, Sappani had an auditor who looked after the family's finances, and he put money into the Indian stock market. But here, the golassary of investment terms is enough to make Sappani throw in the investment towel even before he getting started.
"I knew about insurance and mutal funds, but when I came to Canada I did not understand anything about RRSPs," Sappani says. He adds that people in India dream of retirement just as Canadians do, but the methods for saving are different. In India, children take full care of their retired parents.
Sappani explains that even if he put his money away in a regular savings account in an Indian bank, he could make 14 percent in interest. Here you would be lucky if you made 3 percent in a savings account on a good day.
For many new immigrants, the concept of RRSPs is difficult to grasp and even causes fear because they do not want to lock in their money indefinitely, according to an article at advisor.ca
"For many of them, it is overwhelming," says Peter Merrick, a certified financial planner. "They are coming into a culture where nothing is familiar." These clients are starting from a clean slate, so Merrick explains RRSPs and their tax-saving benefits and encourages his clients to put away small amounts monthly. Before Merrick knew it, these clients were the ones contributing $13,500 to their RRSP because of their lucrative positions.
Like many Canadians, new immigrants are interested in purchasing a home so they appreciate programs like the RRSP Homebuyers Plan, the advisor.ca article said.
Saverio Manzo, senior manager at an investments firm, says that new immigrants come to appreciate that RRSPs accumulate tax-free.
But the flip side to this of course are clients who desregard RRSPs as valuable. Sonia Khurana, a financial planner, says her immigrant clients are open to hearing about investment opportunities, but it takes time before they contribute beyond the bare minimum into their RRSPs.
"i was interested in RRSPs/RESPs at one time because someone came to convince me about them. I put it off as my husband felt the returns were not great. Now he agrees I know what's best for the family and so I will reconsider them!"
Sunita Chera
Housewife, Delta
"As a student I took loans to pay me fees and now I am burdened with paying it back--the increasing interest I pay just kills me. I would want to know more about such schemes as the RESP so that I can avail of it if and when I do have my own family."
Shereen Almahi, Surrey
"Once I get satifactory information on what will be the best benefit or who to trust for my RESP/RRSP investments it would be easier for my husband and me to come to a decision."
Mary Lownds, College Support Staff
Kwantlen University College, Richmond
The best place to get an RRSP can depend on which investment planning firm or banking institution one has a trusted advisor. It (RRSP) should be from someone they trust."
Becky Wong, Vice President
ABF Financial Group
"It doesn't really matter which company is the provider. What's important is that one gets a good advisor who understands the needs of the particular client.
Nicky Felipe, Financial Advisor/Credit Counsellor
Canada Financial
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