Making the Most of Your RRSP

For years, we've heard that an RRSP is a great way to save. And it is, no matter how you use it. However, if you really want to get the most bang for your buck (and who doesn't?), there are certain RRSP tips that will help you really get the most out of your investment.

Your RRSP investments

So without further ado, here are the best ways to get the most out of your Registered Retirement Saving Plan!

1. Learn everything you can

The idea of an RRSP is straightforward enough, but in reality, they can get pretty complicated. FIrst and foremost, an RRSP is an investment, not just another bank account. That means there will always be some risk involved. Understand what you're getting into before you sign any papers.

2. Keep it simple

Obviously, you want diversity in your investment portfolio -- but if you're contributing $100 a month to 10 different mutual funds, it will be almost impossible to track and organize your RRSP. Keep it simple and clean cut.

3. Only 'play the market' if you know how

It's perfectly fine to simply ask a financial advisor or banker to help you select your RRSP investments. In fact, unless you really understand the stock market and what you're doing, it's better to go with a pre-established portfolio than to choose stocks at random.

4. Invest early

Monthly contributions are always a safer bet than lump payments, so forget about running into the bank right before tax season and investing $1,000. You'd be better off spreading that $1,000 over the entire year, and you'll see more returns, too.

5. Know your risk tolerance

Fixed income RRSP investments are safer than equities and don't involve a lot of risk. However, fixed income RRSPs also face higher taxes, and over the long term, equities usually outperform them. Depending on your risk tolerance, you might weight your portfolio in favor of one or the other, but you should definitely include both.

6. Set up automatic withdrawals

Most banks these days can automatically deduct your Registered Retirement Saving Plan contribution from your account. That way, there's no question about whether or not you make your monthly contribution -- it will just come out of the account and be a fact of life, like paying the electric bill.

7. Invest with your spouse

No single partner in a marriage should invest in RRSPs without consulting their significant other. Ideally, go into the bank together. You might wind up with different portfolios and that's just fine, but you should both have an idea of what the other is doing.

Follow these RRSP tips to maximize your earnings from your investments!


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