It's RRSP Season and we've got some advice for you. Here are Top 10 RRSP Strategies for 2002

10) Take Advantage of Early Investing
If you begin early enough, you can accumulate a significant amount of funds by retirement age.

9) Consider taking a loan
If your income is high enough, you should consider an RRSP loan. With 50 percent marginal tax brackets, the interest changes become negligible and the refund significant!

8) Dollar Cost Averaging:
If you can't make your contribution at the beginning of the year, invest monthly in your RRSP's. This does two things: a) it forces you to be disciplined about your savings and b) it eliminates a lot of market volatility as your purchases are made monthly, eliminating the need for market timing. When the market declines, your monthly contributions purchase more shares (lower cost).

7) Canada is a great country to invest in!
RRSP investors should look at the Canadian market before heading overseas. In the two years ended October 31, the Canadian market has been one of the best performing markets in the world as determined by the MCSI international index (G-7 markets).

6) Maximize Your Foreign Content Limit
Without contradicting Point # 7, Canada still only represents only 2 percent of the World stock market. While technology has been booming at home, it is important to diversify your portfolio outside of Canada as well. In fact, if you look at major world market indexes, they outperform the Canadian economy by 3 to 4 percent over any 10 year period.

5) Be A Value Investor
Buy investments that have a relatively low Price Earnings Ratio. This means the value of the stock is lower than the amount it is trading at on the stock market. Often, these stocks include blue chip investments that maintain steady growth.

4) Be Realistic In Your Returns
Prior to the dotcom bust and the tech meltdown, investors became unrealistic about returns. 50 percent annual returns became status quo. However, if you examine market indexes, you will note that the S&P 500 has returned on aver 14 percent over a 40 year investment horizon. And the TSE 300 just over 12 percent. Therefore, 10 to 12 percent returns on investments is a more realistic return on your holdings.

3) Purchase your RRSP's through your employers Group RRSP Plan
Why not purchase your RRSP's with pre-tax dollars as opposed to after-tax dollars. If your employer has set one up, a group RRSP allows you to purchase your investments with a payroll deduction that results with an instant refund at source.

2) Consider Creditor Protecting Your RRSP

1) Establish and Maintain a Financial Plan

If you have any questions regarding this article, please feel free to contact John Klotz, BA., CFP., CLU., Ch.F.C., He is an Assistant Vice President of LMS Prolink. (416)-595-7484 ext. 305 or email at johnk@lms.ca