A Pandemic RRSP Investment Strategy

Now that it’s 2021 and vaccines are being rolled out, you may be wondering what the stock market has in store. The markets have been soaring since the crash last March and some experts think that this is set to continue, whereas others think that there is a correction around the corner. The truth is that nobody really knows for certain, but we have an RRSP investing strategy that will lessen the effects of volatility and help you feel secure.

For 2021, if you are within 5 to 8 years of retirement, you want to look for an exchange-traded fund (ETF) that includes stocks and bonds. Or, if you have more time before you plan on retiring, you could track an equity index leaving out bonds from your portfolio. When you have the right one picked out, make an RRSP contribution schedule for yourself and try not to stray. This can be bi-weekly, or monthly if you prefer.

We know that this is not the most exciting advice, but it is the best option for investing in your RRSP right now. As stocks are currently volatile, you want some type of stability in your investment. By making regular contributions, you’ll be protected from panic in falling markets. 

The deadline for 2020 RRSP contributions is March 1^st, 2021; however, you can contribute to your RRSP throughout the year. Setting up a recurring contribution during the entire year can help you save consistently and keep you on track to reaching your financial goals.

On top of everything, online stock trading is grabbing plenty of headlines these days, and there is much talk about the effects it can have on the market. Using online brokerages has become increasingly popular and, like any investment, can be advantageous at times. However, anyone who is trading using an online brokerage should learn and understand exactly how trading works. The last thing you want is to feel out of your depth when managing your hard-earned money.

A safe way to enter the market, instead of the “all or nothing” approach, is to contribute bi-weekly or monthly, as mentioned above. This will eliminate some risk in case the market falls too quickly. Having your investments spread out will also increase your power of compounding over time, especially if you are prepared to have a long-term investment horizon set.

If you or anyone you know has unused RRSP contribution room, e-mail me at bmoylett@wisdomsi.ca to find out about a complete retirement plan in one simple financial product. You can also reach me at 778-951-2806. I would love to help you or anyone you know retire on time.