1Start contributing now
2 Discipline yourself — Invest regularly
3 Contribute early in the year
4 The Long Term Approach — Stay Invested
5 Maximize foreign content in your RRSP
6 Create a Spousal RRSP plan — Split your future retirement income
7 Maximize performance potential — Add growth assets to your portfolio
 
 

Example:
Both Mike and Susan contribute $100/month to plans that earn a return of 10% annually. Mike starts investing right away and then stops at age 30, while Susan delays investing until she turns 30, but invests for 35 years.

By the time that Mike and Susan retire at age 65, Mike’s investment has grown by $63,648 more than Susan’s, despite the fact that she contributed $32,400 more to her plan.

The eight years earlier that Mike started investing was enough time for his much smaller investment to compound to a greater retirement amount.
 

Canadians are eligible to contribute to their RRSPs from January 1 of any calendar year to 60 days into the following year; however most of us, unfortunately, wait until the last moment to make our contribution. If you can make your contribution at the beginning of the year, your plan will benefit from up to 14 extra months of tax-deferred compounded growth for every contribution.

Example:
By making the same dollar contribution and assuming the same return (10%), the value of the plan that had contributions made at the start of the calendar year versus the end of the RRSP season (in the following year) grew by $82,250 more after 30 years of investing
 

One of the most common ways of negatively affecting the returns of a portfolio is to engage in market timing (trying to avoid “bad” times). Most investment professionals will agree that using market timing as an investment tactic is extremely difficult, yet so many investors continue to try.

Many of the best returns in stock and bond markets occur within a very short time frame; any attempts to time markets consistently are almost certainly doomed to failure. It is better over the long term to ride out the bad times in order to ensure you are in for the good times

Canada represents a small part of the global economy and less than three percent of the world’s total market capitalization. As financial markets become more global in scope, it is prudent for investors to take advantage of the growth opportunities and diversification that foreign markets provide.

Historically, many foreign stock markets have provided higher returns than their Canadian counterparts.

If you want to boost your global exposure above the foreign content limit, you can invest in our 100% global RSP-eligible funds. These funds attempt to track the performance of underlying foreign funds and do not affect the foreign content limit in your retirement portfolio.

The benefit of a Spousal plan is to reduce income tax on retirement income by splitting income between the two spouses. The usual case is where one spouse anticipates a significant retirement income while the other will have a lower retirement income. In this case, a spousal RRSP should be set up in the name of the lower income spouse while the spouse with the higher income becomes the contributor. For example, assume that a couple has $50,000 in total annual retirement income. The total tax paid will be lower if each spouse has an income of $25,000 than if one spouse has an income of $50,000.

Contributions are based on the contributor’s limit. The contributor gets the tax deduction, while the planholder owns the investments in the plan.
 
 

As you move closer to achieving your goals, you should gradually switch some of your growth assets to fixed income investments, like bond funds in order to lock in the gains made from your growth investments. This will add stability to your portfolio as fixed income assets tend to fluctuate less than growth assets.