 |
| Adrian Mastracci |
By Paul Delean
Montreal Gazette
Monday, January 19, 2004
Only about half of all working Canadians contribute to Registered Retirement Savings Plans in any given year. The proportion that actually enjoys the exercise is considerably smaller.
Because of the slew of options, the barrage of promotion and a flood of media reports indicating you'll need to save so much to avoid eating cat food in retirement, many people find the whole process bewildering and stressful.
Adrian Mastracci, investment counsel at Vancouver’s ‘fee-only’ KCM Wealth Management, says, "The 2004 contribution will be made soon into fixed-income selections as part of the rebalancing to maintain the adopted asset mix.”
So how do the professionals do it? We asked regular contributors to Gazette personal-finance stories if, when and how they put money toward RRSPs, and where they're investing the latest contributions. This is what they told us.
BENJ GALLANDER
President of Contra The Heard investment letter
"I always contribute as much as possible to my RRSP.
"I try to do it as soon as I know my limit, rather than waiting until the RRSP deadline, as it allows me to compound interest tax-free sooner.
"Until a few years ago, I always put the money in a GIC, but given that I'm now more diversified and interest rates are low, I search for a Canadian stock."
JAMIE GOLOMBEK
Vice-president (tax and estate planning), AIM Trimark Investments
"I always maximize my RRSP contribution each year - after all, it's the No. 1 tax shelter available to all Canadians.
"I've already topped up my 2004 contribution based on the new 2004 RRSP maximum limit of $15,500.
"I invest a large portion of my RRSP in the Trimark Fund and Trimark Canadian Fund, two excellent, long-term, diversified equity funds that have produced superior returns over the long term, which is the perfect time horizon for my retirement."
JONATHAN BICHER
Tax partner, Friedman & Friedman
"I will be making my maximum contribution, sometime before the end of February. I consider it important to plan for my retirement, although as a parent with young children, my first priority is life insurance to protect my family in the event something should happen to me.
"I invest through a broker whom I rely upon to make the investment decisions. He generally adheres to a fixed-income approach for tax-sheltered investments."
LINDA JOHNSTON
Financial planner, In Visio Wealth Advisory Inc.
"Maximizing my RRSP is my top priority financially and I do so every year.
"I would even borrow to make sure I contribute my maximum allowable. I contribute through an automatic monthly withdrawal plan and I may make lump-sum contributions throughout the year if I have extra liquidity.
"The earlier in the year I reach my maximum, the better, since my money has more time to grow on a tax-deferred basis. My portfolio is growth-oriented since I have a long-term planning horizon."
LOUIS ASCAH
Economics professor, Université de Sherbrooke
"Yes, I will be contributing to an RRSP this year as I usually do, though the question of where to invest this year is not a simple one.
"It should be based on a long-term asset-allocation decision, not an attempt to chase the winner of the last mutual-fund race.
"Age, risk preference, family obligations and other assets - including pensions - also figure in the decision.
"I'm 57. My defined-contribution pension plan is heavily (70%) invested in equities. To compensate, my RRSP is overwhelmingly in bonds. But when I convert the pension plan to an annuity, I may switch back to mostly equities in the RRSP."
MARTIN GARNEAU
Financial planner, Majesta Financial Partners
"Yes I do contribute to an RRSP.
"Like most Canadians, I am preparing for retirement and so I really don't consider it an option, nor a question that needs to be considered every year.
"I contribute at the beginning of each January for the current year, as opposed to waiting 14 months later; this way I am taking advantage of extra compounding.
"My RRSP contribution is invested the same way year in, year out: in a properly diversified balanced portfolio.
"My RRSP portfolio is identical to that of most of my clients, so they know I put my money where my mouth is."
JEAN-PIERRE DUGUAY
President, Everest Securities, Groupe Financier Everest
"I usually contribute to an RRSP since it is the most efficient way to reduce income tax and save towards my retirement. In order to split our income at retirement, I contribute to a spousal RRSP in my wife's name. My contribution is usually done at the beginning of the year in order to get the maximum benefit of the compounding of the investment.
"My yearly RRSP contribution is always invested 40 per cent in fixed income securities and 60 per cent in equities (30-per-cent Canadian and 30-per-cent-foreign). This asset mix would be similar to that of large pension funds. Since these monies are for our retirement, we do not want to take more risk than a regular pension fund.
"Since we already have some strip bonds in our portfolio, we will be investing the fixed-income portion of our contribution this year in a corporate bond fund, either Talvest High Yield Bond Fund or Guardian High Yield Bond Fund. The Canadian equity investments will be split between Fidelity Canadian Disciplined Equity and Bissett Canadian Equity Fund, while the international investments will be made in Mackenzie Cundill Value Fund and Trimark Select Growth Fund."
JOHN ARCHER
Investment adviser, RBC Dominion Securities
"I always maximize my RRSP contributions, rain or shine (and for investment advisers, there's been a lot of rain the last 3-4 years).
"I make my regular contributions through both our group RRSP plan and into my personal RRSP plan.
"They're invested in the Sovereign Investment Program, a discretionary pooled investment program.
"I do this as I believe in this investment strategy but it also removes any potential conflict of interest with my clients in regards to trading of individual securities.
"Monthly contributions allow for dollar cost averaging of the investments.
"My asset mix is aggressive with approximately 80 per cent invested in international and domestic equity pools, and I always maximize my foreign content.
"In fact, I boost my foreign content exposure through the use of RRSP-eligible foreign-content funds which use derivatives to emulate foreign funds yet stay onside in terms of foreign content rules."
KEITH DONOGHUE
Financial adviser, Berkshire Investment Group
"I do RRSP contributions on a monthly basis to benefit from dollar-cost averaging.
"I balance the contributions between my personal RRSP and a spousal RRSP for my wife. The tax deduction now plus the tax-deferred compounding of the investments make RRSPs a virtual no-brainer. As for the investments, I make sure that the asset allocation between equities and fixed-income remains in alignment with both my wife's and my risk tolerances."
JAMES GAUTHIER
Mutual-fund analyst, Dundee Securities Corp.
"I always contribute the allowable maximum to my RRSP.
It's the best deal around.
"My contributions are typically made throughout the year, and invested in a diversified portfolio with the long term in mind."
ADRIAN MASTRACCI
Financial adviser, KCM Wealth Management
"My aim is to contribute to the RRSP early in the year for that year. The 2004 contribution will be made soon into fixed-income selections as part of the rebalancing to maintain the adopted asset mix."
|
