January 28, 2009, 6:00 am

Some Powerful Investing Strategy For Your RRSP’s

by: The Financial Blogger    Category: RRSP
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Hey, February is getting closer and your banker will surely call you (if it’s not done already!) in order book an appointment and invest into a registered retirement saving plan. The market looks like shit for the past 18 months and he has the guts to ask you to put more money in it? Yeah right! Hahaha! You may want to reconsider a few RRSP investing strategy before you make your final decisions.



Linked notes in your RRSP?

I am personally not a big fan of linked notes (you can read more on the topic here). However, it has some advantages if you have been roughed by the markets lately. If you do not consider investing in mutual funds, indexes or other product related to the market due to their volatility, you might like linked notes. They guarantee your capital 100% and offer a yield related to the market. They are usually offered for 3 year and older (up to 8 years). Since this is an investment for your retirement, you don’t really have to worry about the investment term.

Cut the fees in your RRSP account

If you are young and still accumulating on a monthly basis, this strategy might be difficult to apply. However, if you have more than 100K invested in your RRSP account, you will love this strategy.

Instead of paying fees to have your fixed income managed you can do it yourself or having your financial planner / broker do it for you for 0% MER’s! By doing a bond ladder will avoid unnecessary fees on something that will give you only 4 to 5% yield anyway. So separate your RRSP account into 2 part according to your original asset allocation: a part with 0% MER’s with a bond ladder and the other part fully invested in the markets (Canadian, American and international markets).

Get a rrsp loan to catch up unused contributions.

This is an easy and simple way to boost your RRSP: force yourself into a periodic investment 😉 You will have to do it backward and contract a loan to create the saving habits you it is better now than never 😉

Once your rrsp loan is reimbursed, keep the same amount and invest it directly into your RRSP’s. Therefore, you won’t have worry about your RRSP contribution and retirement. You will be set on semi automatic pilot 😉

What is your RRSP strategy for 2009? Are you going into index funds? Directly into ETF’s? GIC’s and corporate bonds?

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Comments

My boyfriend and I are young investors and we have contributed to our RRSPs only in recent years (at least trying too!!!)

We have two main objectives : 1- Our RRSPs is for our retirement in the longer term (that’s certainly not for soon!!). As the market is down, I think it’s the time to buy. For the moment, I don’t want to get a RRSP loan. I think I will use my margin account in order to invest 2- Most importantly, this capital would enable my boyfriend and I to buy our first home under the canadian house buyers plan (HBP).

I do not contribute methodologically and but am thinking about accumulating on a regular basis (that’s in process!!). I think I will buy invest into a Canadian Index fund. Do you have any suggestions? with the MER comparison?

I’ve been reading about a couth potato portifolio and that’s what i am planning to do with mine. Open a spouse rrsp with td e-series, get some loan and put up on my rrsp.

in addition to this, i’ve been contributing through my company as well, every time I get paid, an amount goes to my mutual fund there, of course, low mer 🙂

Interesting!!

My current portfolio is highly weighted on cash and financial services. My RRSP strategy for 2009 would be: I will reallocate and pick into the Canadian market in the following sectors Industrial Products, Utilities and Consumer staples (not yet sure).

I do not want to invest in bonds for this year. I think I will follow your advice with a Canadian dividend paying fund.

Well, gotta admit, I was very interested in reading this and while I still have a lot of room to contribute to my RRSP, I am reluctant to take a loan, simply because I feel great about investing my money, even taking big risks with it, but investing money that I don’t own? Not convinced… what do you think TFB?:)

by: The Financial Blogger | January 28th, 2009 (9:36 pm)

Sophie;
If you plan to buy a house with your rrsp investment, I would not suggest you to put everything in index funds. What happens if you want to buy next year and we are still under great volatility? You may want to be more conservative and go for balanced portfolios 😉

IS;
Actually, A RRSP loan is a good strategy if you plan to pay it on a short period (i.e. max 2 years). If you need more than that, don’t bother using a rrsp loan and simply setup a systematic invesment 😉

ok you are right!!! Balanced portfolios performed better that equity portfolios (disaster in 2008!!!! ) We are better to be conservative as our RRSPs went down so badly last year (trying not to check at it everyday, at least we still have some time to invest).

I have money in my non-registered cash account (cad and usd), but I have reported big losses in those accounts.

Now that I want to put more money in my RRSP, what type of positions (cash, equity, equity funds, balanced funds …) would you suggest to transfer into my RRSP? What’s the fiscal impact if I transfer few of my positions into my RRSP?

by: The Financial Blogger | February 2nd, 2009 (1:57 pm)

Sophie,

If you transfer a part of your non-registered portfolio into a registered portfolio (like a RRSP), you won’t be able to claim your capital loss. So if you are ready to say “good bye” to the capital loss, you can switch your funds to your RRSP account.

In order to know which moves to make, you should see your financial adviser 😉 But technically, if you have cash to transfer into your RRSP account, it’s always better since there is no tax implication.