Registered Retirement Savings Plan (RRSP)

A Registered Retirement Savings Plan or RRSP is a great way for Canadians to save toward retirement.  Basically, people can contribute after tax dollars to their account and not only does their money grow on a tax-sheltered basis until they reach retirement, but they get a tax refund to boot.  A great way to supercharge your Registered Retirement Savings Plan (RRSP) is to take that tax refund and reinvest it back into the RRSP.

A popular feature of a Registered Retirement Savings Plan (RRSP) for young people is the Home Buyers Plan.  If you contribute to an RRSP and wish to purchase a home, you can withdraw up to $25,000 (tax-free) from the account to make the down payment.  Of course there are rules governing this and a certain portion of the money must be paid back each year until the balance owing reaches zero.

In my self-directed Registered Retirement Savings Plan (RRSP) I hold a combination of low-cost TD e-series funds for my equity exposure and some exchange-traded funds (ETFs) for my fixed-income.  The exact breakdown is as follows:

20 % TD Canadian Index Fund – e (TDB 900)

20% TD US Index Fund – e (TDB 902)

20% TD International Index Fund – e (TDB 911)

2% TD European Index Fund – e (TDB 906)

6% iShares S&P TSX Capped REIT Index ETF (XRE)

12% iShares S&P TSX Canadian Preferred Share Index ETF (CPD)

5% Vanguard Canadian Short-Term Bond Index ETF (VSB)

5% Vanguard Canadian Short-Term Corporate Bond Index ETF (VSC)

1% TD Canadian Bond Index Fund – e (TDB 909)

10% TD Canadian Money Market Fund (TDB 164)

I usually re-balance the portfolio on a quarterly basis. In the future I would like to add some solid US dividend stocks to the portfolio. This might be wishful thinking though because the Canadian dollar would have to go back to par to make it really worth my while.

For more information about the RRSP and some investment strategies for it check out these titles from Amazon:

Greg Habstritt, The RRSP Secret: Defend and Build Your Wealth with This Powerful Investment Strategy

Bruce Sellery, Moolala Guide to Rockin’ Your RRSP: Start Rockin’ in Five Easy Steps

Gordon Pape, RRSPs: The Ultimate Wealth Builder