RRSP Investment Tips
One of the biggest advantages of buying a Registered Retirement Savings Plan, or a RRSP, is having many investment options to choose from while enjoying tax deductions on every contribution. But deciding how to invest RRSP funds can be overwhelming if you are inexperienced and unsure about which funds, stocks, bonds or account types are right for you. Fortunately, there is no hurry with an RRSP and you can always get the help of a financial advisor to walk you through the process, gain knowledge and make sound investment decisions moving forward.
Take Your Time
Just because you’re putting money into an RRSP doesn’t mean you have to invest it right away. You’ll still get tax deductions on your contributions and can simply hold your funds in a savings account or a money market fund while you think it over. Investing should never be a rushed decision and you should always have as much information as possible about what is the best investment path for your age group, risk tolerance, risk capacity and other important factors.
Do Your Research
The thing that sets the world’s most successful investors apart is the amount of time they spend understanding exactly what they are investing in. The markets are a complicated place full of numbers, charts and graphs, industries and dynamics that never seem to stay still. But even though it may seem unpredictable at times, investment relies heavily on research — which can help you see beyond the past and current performance and may actually help you understand what to expect in the future. With proper due diligence, quantitative data and analysis, you’ll be protecting yourself from unnecessary risk and will have the best chance of making investments that pay off.
Get a Second Opinion
While it doesn’t hurt to know a thing or two about what you’re investing in, many people simply don’t have the time to acquire the skills and knowledge they need to invest on their own. A qualified financial advisor can assist you with understanding how to invest RRSP funds through personalized investment solutions that revolve around you. This way, you don’t have to feel overwhelmed and can develop your investment skills and knowledge over time while enjoying investment returns.
Understand Risk
Unfortunately, there’s no such thing as a risk-free investment. Any form of investment involves some form of risk (from low to moderate to high), and it must be considered in relation to your financial position and goals. Knowing your risk tolerance and risk capacity will allow you to choose investments that are realistic and offer the best risk vs. reward opportunities, which can adapt to your finances and investment goals as they evolve.
Get in touch anytime to learn more about investing and the opportunity to enjoy tax-free investment growth and tax deductibles with your RRSP.