Tips for RRSP investing

Q – How can people build a winning RRSP portfolio during tough times like these, with interest rates so low and stock markets in turmoil? – C.C.

A – 1) Create a long-term plan before you invest, and stick to it. The greatest mistake investors make is to react in a knee-jerk manner to the news of the day. If you have a sound strategy, it will pay off over time.

2) Diversify. Don’t overload your RRSP with stocks or equity funds. A mix of stocks and bonds will greatly reduce risk, and will generate very good long-term results. For balanced investors, I recommend 40% bonds or bond funds, 50% stocks or equity funds, and the remaining 10% in cash.

3) Don’t reach for the moon. Trying to achieve spectacular returns often ends in disaster. Look at the people who went heavily into technology stocks or funds in their RRSPs in the late ‘90s. They have suffered huge losses. Aim for an average annual return of around 8%. That can be achieved with reasonable risk and will allow you to build a very sizeable

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