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A New World of RRSP Investing

As most of you are aware we are big proponents of global investing and have always recommend that our clients maximize their foreign content holdings within their Retirement Savings Plan (RSP). Over the past few months those investors who want more of their retirement savings invested in global markets have been given many more options. Most of the major Investment Management Companies now have versions of their best international investment funds available in a format that is 100 % RSP eligible. This effectively allows investors the ability to have up to 100% of their RSP assets invested in foreign markets.

Why invest globally? There are two reasons for investing on a global basis. The first is enhanced returns. The Canadian markets make up a little more than 2% of the world’s total market capitalization and over the last 25 years, global markets have collectively provided better returns than the Canadian market. The second reason is reduced volatility. Many investors share a common misperception that, in order to achieve better rates of return, they have to assume more volatility. By investing globally, you can actually increase your rate of return while decreasing the overall volatility of your portfolio. This is why most of you who have non-RRSP investments with our office have all, or the majority of those investments invested on a global basis. This opportunity is now available to the RSP investor.

As you are no doubt aware this change makes a big difference in how we would now structure an RSP portfolio. We will be contacting many of you over the next few weeks to discuss changes to your investments. In the meantime if you have any questions please don’t hesitate to call the office.

The opinions expressed above are solely the opinions of Timothy Ming.

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