Q&A: RRSP asset mix
Question: I have read several of your columns about asset
mixes and basically I do not see the benefit of having equities in an RRSP.
Capital gains or dividends, which are taxed favourably in non-registered accounts,
will end up being taxed as interest when eventually withdrawn from an RRSP.
Would it not be more advisable to keep only bonds and interest bearing funds
in an RRSP (35 per cent) and the balance (65 per cent) in equities in non-registered
accounts? – J.M.
Gordon Pape answers: Absolutely! If you have enough capital
to maintain both registered and non-registered portfolios, that is exactly the
way to proceed. Also maximize tax efficiencies wherever possible.
Unfortunately, many people do not have enough savings to enable them to have
two accounts so this strategy is not available to them. If you only have an
RRSP portfolio, then you have to decide whether to include stocks (or equity
mutual funds) for their superior growth potential, even though you sacrifice
the tax advantage in the process. Faced with that decision, my advice is to