Practical tips for investing your RRSPs

Investing your RRSPs is probably the hardest decision for most people. There is no shortage of choices. You can invest in savings accounts, money markets, GICs, mutual funds, stocks, bonds, Exchange Traded Funds (ETFs) and so much more. Putting money into the RRSP is one thing but investing that money properly is another.

Recently I wrote about5 timeless tips for Investing Your RRSPs. Here are a few more practical tips to think about before making long term investment decisions.

Don’t rush to make a decision.

The RRSP season is a busy time and sometimes investors think they have to make long-term investment decisions as soon as they put they buy the RRSPs. When in doubt, remember that you can get the money into the RRSP and get a tax deduction without having to make the investment decision. If you are short on time but need to get a tax receipt, just put the money into an RRSP cash account or a money market fund for the time being just to get the receipt and make the investment decision later when you have more time.

Do your homework.

Good research leads to good decisions. Unfortunately, I see too many people who do no research at all or if they do some research it’s usually just performance-based research. My basic principle for research is that the more research you do, the more likely you are to make better investment decisions. It increases the probability of investment success. Research does not always guarantee success but it’s better than no research at all. Good research should incorporate a combination of quantitative data as well as qualitative analysis. In the end, multiple dimension analysis will always be better than a single dimension analysis. Research is not something you simply do once. Rather good research is an ongoing process. Here’s a couple of articles I wrote that might help with research:

Get help

For many people, the thought of developing an investment plan and doing research on their own is very scary and intimidating. As a result, some people will seek help from financial advisors when it comes to making better investment decisions. That being said, choosing qualified people to help you is no easy task in itself. Here are some articles I have written on getting help from financial advisors.

Manage your risk

When it comes to investing, risk cannot be ignored. That being said, more investors place much more emphasis analyzing past performance than risk and quite often, the risk is ignored altogether. If an understanding of risk is so important, then why do so few people take the time to understand it? Here are some different ways to analyze risk from my first book Mutual Fundamentals.

It’s also important to look at your personal risk budget by asking yourself how much you can stand to lose. I believe every investor needs to understand not only their risk tolerance but also their risk capacity.
There’s no shortage of investment fads and hot tips but it’s the timeless tips that stand the test of time. Do you have any timeless tips you want to share?


  1. youngandthrifty

    yeah, I think that everyone tends to get their RRSP’s quite late (e.g. February 28).. I’m sure financial advisors are busy at this time of year.

    I personally like the idea of dollar cost averaging for my RRSPs, you don’t have to worry about it or think about it too much 🙂

  2. Jim Yih

    Thanks for the comment Young and Thrifty. I think the best strategy is to make your RRSP decisions automatic and then revisit your strategy from time to time.

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