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February 8, 2005

RRSPs: Key Strategies

RRSP season is here and if you are like many investors, you probably leave it to the last minute to make your annual contribution. To get you thinking about this year’s RRSP contribution, below are some excellent RSP tips every investor should remember.

Develop a fully balanced portfolio:
Consider the full range of investments available, along with the risk and return ratio of each. With the help of your Investment Advisor, develop a balanced, diversified portfolio of RRSP assets.

Consider a spousal RRSP:
You get the tax savings but the money compounds tax-free in your spouse’s name for retirement. This could mean two lower tax brackets at retirement instead of one higher one. The goal here is to equalize income in retirement. You can make spousal contributions even if you contribute to your own plan, but the total amount must not exceed your own maximum allowable contribution. Keep in mind that although the assets belong to your spouse in this case, you should watch out for the attribution rules.

Take advantage of the foreign content allowance:
Many Canadians are not aware that you can invest up to 30 percent of your RRSP’s book value in certain non-Canadian securities. International investing can build greater stability through diversification, and offers other growth opportunities.

Consolidate your RRSP holdings for easier record keeping – and better growth:
There’s no limit to the number of RRSPs you can own. But, review your holdings periodically to make sure you’re getting the most from them. And remember that when you mature your RRSPs at retirement, it’s easier to move your savings into a Registered Retirement Income Fund from one or two sources than from several.

Understand RRSP over-contribution limits:
All RRSP holders 18 years of age or older now have a lifetime over-contribution allowance of $2,000. Beyond that, a penalty of one percent per month is payable on the excess contribution.

Rely on professional advice:
Professional Investment Advisors can help you set your goals and objectives. They will work with you to build an investment plan around these objectives and determine the right investment choices for your RRSP.

Avoid taking a short-term view:
By taking a long-term approach to investing, volatility becomes less of a concern and temporary downturns in the market can become buying opportunities. Remember – RRSPs are intended to be long-term investments.

Daniel Saikaley, CA CFP EPC
Investment Advisor
CIBC Wood Gundy
Visit my website at

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