When creating an investment plan, sit down with your advisor to determine the best strategies for meeting your financial goals. Below are a few simple strategies that you should keep in mind when establishing these goals.


Strategy # 1 – Talk to an advisor

Talk to an advisor to determine which strategies will help you achieve your investment goals. Sound, professional advice is critical to achieving your retirement goals.

Strategy # 2 – Start as early as possible and invest regularly

There are many ways you can contribute to an RRSP: through a Pre-Authorized Chequing (PAC) plan, a group RRSP or even a self-directed RRSP.

Monthly contributions versus yearly lump sum contributions are not only easier, but also provide the benefits of dollar-cost averaging and compounding. If your employer offers a group RRSP, your contribution can be automatically deducted from your pay cheque. If possible, try to maximize your contribution each year to make the most of tax-deferred compound investment returns.

Strategy # 3 – Diversify your portfolio and increase foreign content exposure

Studies have shown that up to 90 per cent of a portfolio’s returns are determined not by the choice of individual securities, but by the way the portfolio is diversified. You can diversify your holdings by asset class, market sector, geographic region and investment style. The principle remains the same: by diversifying your holdings in a variety of ways, you lower the volatility of your portfolio while increasing its potential for higher returns.

Since Canada only represents approximately three per cent of the global marketplace, you should also diversify your portfolio by investing outside Canada.

Strategy # 4 – Utilize available contribution room

If you have unused contribution room available or think you have fallen short on contributing to your RRSP, speak to your advisor to determine whether an RRSP loan may be right for you. Once you receive your income tax refund, you could use the refund to help pay down the loan.

Strategy # 5 – Consider income splitting using a spousal RRSP

If your spouse’s future tax rate is expected to be lower than yours, consider income splitting by directing your contributions to a spousal RRSP. With a spousal RRSP, there is an opportunity for income splitting at any age and is not limited to 50 per cent.


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