Investments that should be in your RRSP
RRSPs fall into 3 general categories when it comes
to investments and each has its advantages and disadvantages.
Guaranteed RRSPs –
With guaranteed plans such as GICs, the advantage is
you know exactly what you’re going to get. The disadvantage
is it won’t be very high. If all of your RRSP savings
are in GICs, you run the risk of losing to inflation.
Mutual Fund RRSPs –
The second category is mutual funds. Mutual funds come in
all types and offer a wide variety of risk and reward combinations,
from ultra-conservative to risky, high growth.
By investing in stocks and bonds, mutual funds offer far
better returns over the long-run than guaranteed investments.
However, they can be volatile and unpredictable and their
values are not guaranteed.
Self-directed and broker-directed
RRSPs – These are plans you can manage yourself
though financial institutions and brokerage firms or that
you can have managed for you by the broker.
Their advantage is that they can contain a diversified portfolio
of investments designed for minimum risk and maximum returns
based on your investment objectives and risk tolerance. It’s
self-directed so you can be as conservative or aggressive
as you like.
Now what. These are 3 different approaches to RRSPs. But
you haven’t really dealt with the question of what should
be in your RRSP. That’s because the answer lies in another
area of financial planning. We have to look to investment
planning to find the answer.
If you’d like to tackle that question yourself, click
here and you’ll be taken to the section on Investment
Planning. If you’d like to get expert help, click
here to find the RBC financial planning professional closest
to you.
Important information about our financial planning services can be found at the bottom of our
homepage.
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