by Tom Bradley

In the Advisor Corner section of the Report on Business on Wednesday, three advisors laid out their strategy for their RRSP’s. It all sounded reasonable and was going well until two of the three made estimates of what returns are going to be in 2018.

"Ms. Hamilton would like to see a 7 to 8 percent rate of return for her RRSP portfolio in 2018."

"Mr. Kam is looking for a return in his RRSP portfolio of about 4 per cent in 2018."

Clink, clink ... clunk.

At this time of year, we’re being fed a daily diet of investing features and advertorials, which makes it a good time for us to throw in our RRSP reminders.

• First, Ms. Hamilton and Mr. Kam have no idea what the market is going to do in 2018. Nobody does. For them to put a number to something so unpredictable is highly misleading and does their clients a disservice. No strategy should be based on a short-term market call. (It’s interesting to note, the third advisor didn’t take the bait. Mr. Klein did what we do, which is to look at longer-term expected returns.)
  
• Asset mix is always about your total financial assets. You shouldn’t think about your RRSP in isolation. An RRSP is just an account type and because of its tax features may require some adjustments relative to your overall mix (i.e. holding more income assets), but it doesn’t require a whole new strategy.
  
• Your RRSP (and TFSA) contributions are excellent opportunities to rebalance your overall portfolio. If the good stock markets have tilted your mix too much towards equities, then you can allocate your contribution to fixed income investments.

As the three advisors preach, you should make RRSP and TFSA contributions as automatic as you can. Do them every year, no matter what the markets are doing. And do as much as you can. The last third of your life depends on it!