# RRSP and non-sheltered investment mix



## OnlyMyOpinion (Sep 1, 2013)

This is our first post on CMF, and we thought we’d share some of our RRSP and savings approach over the years.

If we sound like we had this all planned, we didn’t. We have bumbled and stumbled along on our journey towards retirement. But we’ve tried to learn, make changes when we become convinced they are needed, and ultimately be responsible for our own money and our own retirement. 

As a just-married couple, our mortgage and annual RRSP contributions sucked up all of our investable savings. The RRSP’s were our only investment accounts, so we held a balance of fixed income and equity funds (~40/60) with a bias towards growth. Our cardinal rule was to max out our RRSP contributions each year without exception to get the benefit of that tax deferral. We continue to do so.

Over time, with the mortgage paid off and increased earnings, we began to build our non-registered savings, initially also a mixed bag of investments. 

Eventually, we reshuffled the mix so that our RRSP’s became 100% fixed income (sheltered interest), and our non-sheltered account became nearly 100% blue chip dividend growers that DRIP (capital and dividend income). I’m ignoring some % held in cash, REITs and monthly income fund. Across accounts the ~40/60 weighting remains. There’s nothing novel here. Lots of sources stress the importance of tax efficient investing. We’re just slow learners and took a while to actually make it so. 

Now, we accept growth of a few % above inflation within our RRSP’s. They used to hold laddered 5yr GIC’s, but as rates declined we moved entirely to laddered, investment grade, corporate strip bonds. Once bought, we forget about them until a lump of cash appears in our account. Then, it is easy to search the current strips and re-invest on-line with a few mouse clicks. To us, rising rates just mean the next maturing tranche will be rolled over and locked in at an improved YTM.

Over the years, multiple bank and trust accounts have been consolidated into two self-directed RRSP’s and one joint trading account. The three are bundled on-line with TDW, easy to invest, track and DRIP with no fees. 

We’ll begin retirement by drawing from our RRSP’s and CPP (no company pension). We don’t expect to need to draw from our non-sheltered income until our 80’s, so it will continue to DRIP and grow. But it is there for extraordinary expenses or to supplement income. 

As we think about it, the role of the internet in retirement planning today cannot be overstated. It doesn’t seem very long ago that our investment information came from bank brochures and library books. It was nearly impossible to invest without going through an ‘advisor’. Each transaction occurred at the bank counter and our account statements came by mail once a quarter. A really good MER was 1.5%, and $29.99 was the discounted trading fee. Strip bonds were inaccessible and index funds didn’t exist. 

Today, it’s never been easier to invest and plan for your retirement - it’s the saving part that’s still difficult. It still requires setting your priorities, making sacrifices, and patiently sticking with it.

Cheers.


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