10 conditions of RSP love
Some RSPs are hard to love. The fees may be on the high side. Maybe the investments it holds were someone else's idea, and you're not sure if they're actually right for you.
That's RSP dissatisfaction, and it's not the way it should be.
You should love your RSP.
RSP love is the feeling of confidence you have when you trust that your RSP is working in your best interest.
Here are 10 conditions of RSP love.
1. You're clear about what an RRSP is
You know it's not an investment, per se. And it's not actually a "plan" either. A Registered Retirement Savings Plan ('RRSP,' or 'RSP' for short) is simply a type of account, with special features that encourage Canadians to save for retirement.
You know to review your annual CRA notice of assessment to confirm how much money you're allowed to contribute to your RSP. And you appreciate the tax credit that those contributions produce. You have invested your contributions, so they can grow and earn income tax free in the account.
Later, when you retire, you know you can withdraw funds from your RSP and use them any way you wish.
2. You understand the investments in your RSP
Some providers offer RSPs that can only hold certain investments, like GICs, and some providers recommend packaged products for your RSP that are basically collections of different underlying investments. Other RSPs give you the freedom to hold a wide range of investments, including U.S. and Canadian stocks, exchange-traded funds, bonds, mutual funds, GICs, and more. Any one of those approaches can work. The important thing is to stay with investments that you understand, and never let anyone talk you into investments that you don't understand. You're in charge — you control the account and decide which investments to hold.
3. You're comfortable with the level of risk in your RSP
You know that every investment carries some degree of risk. To earn a higher return over the long term, you accept a certain amount of risk in the short term. Time is a key factor: the potential impact of market volatility is greater over the short term than it is over the long term. If you're closer to retirement, you've likely moved to a safer asset mix. If you have a longer time horizon, you know you can choose more growth-oriented investments for your RSP, because your portfolio has time to recover from short-term volatility. You're at ease with the degree of risk inherent in your portfolio—when markets go through a rough patch, and some of your investments drop in value, you take it in stride.
4. Your investments are well diversified
You understand the wisdom of spreading money among different kinds of investments, which tend to respond differently in various market cycles. For example, historically, rising equity prices have been associated with falling bond prices. Your well-diversified investments allow you to participate in the gains of the best-performing assets, while limiting your exposure to declining assets. This reduces overall volatility and gives your RSP portfolio a smoother ride.
5. You understand the fees and other costs
You know what you're paying for your RSP and believe you're getting good value for money. Self-directed brokerages have low fees to help you keep more of your money invested. With a self-directed RSP, you can expect trading commissions under $10, free ETFs, and low fees.
6. You have account information at your fingertips
You can get clear, easy-to-understand information for your RSP account at any time, on your computer or on your mobile device. You can see the value of your portfolio and of each individual investment, and you also have multiple views showing how your assets are allocated and how they're performing.
7. You can make transactions easily
You can go online any time, and quickly and easily buy and sell investments to take advantage of market opportunities, or simply to rebalance your RSP portfolio back to your target asset allocation.
8. You have powerful investment research tools
Your RSP provider gives you access to powerful tools and resources, like stock and ETF screeners, and analyst recommendations, to help you discover and evaluate potential investments for your RSP, so you can make well-informed decisions.
9. You're building your knowledge
Your RSP provider offers a wealth of educational content to help you gradually build your investing knowledge, at your own pace.
10. You get prompt, knowledgeable support
When you have a question about your RSP, or any issue related to your account, you can talk to a knowledgeable representative and get a prompt, accurate response.
If you have questions about opening or investing in a Qtrade Investor RSP, talk to one of our investment representatives. Contact Us.