How to Make the Most of Your RRSP Contributions

Adrian Brijbassi

Iveta Koskina has seen Canadians rack up their retirement dollars through some fine-tuning of their portfolios and she's also noticed a lot of people miss out "simply because of a lack of knowledge."

A senior financial planner with a proven track record, Koskina has plenty of knowledge to impart to existing and prospective clients, especially in the midst of RRSP season. She offers these three tips for making the most of your registered retirement savings plan.

Put money aside. "The No. 1 rule of thumb, anywhere you look, anything you read, is you should always pay yourself first. You should be putting aside 10 per cent of what you earn to ensure you have a certain base for your retirement. Is it going to be enough for the future? I don't know, but it will definitely make a difference," says Koskina, who consults for Investors Group Financial Services, the largest financial planning company in Canada. You can have your RRSP contribution automatically deducted from your payroll with each paycheque.
Proper use of refunds from RRSPs. Koskina says she had one client save up $50,000 in less than 11 years by properly allocating the RRSP refunds between paying down mortgage debt and re-investment, especially into dividend funds. "If you change the amortization of the mortgage, that difference in dollars on a monthly basis can add up, and if you invest it well, you can still reduce your mortgage terms by paying it down each year and having more money in the bank."
Managing your investments. "To be managing your portfolio properly you should be re-balancing at least annually and sometimes semi-annually," says Koskina, naming the four components of a balanced RRSP portfolio: Fixed-income vehicles, balanced funds, Canadian equities and foreign equities. "In the end if people are terrified, they stay in their GICs, but by not having a balanced portfolio they're really missing out on opportunities," says Koskina, who has been in the financial planning industry for 12 years and holds monthly seminars for prospective clients. Guaranteed Income Certificates, she says, have a place in an investment plan but they're only one of myriad options available to Canadians.