my money
At a Glance
Helping You Understand Financial Planning and Investments
Investing your RRSP money
Don’t let roller coaster markets push you off track
The RRSP contribution deadline of February 29, 2008 has come and gone,
and you may still be recovering from the rush of making a last minute RRSP
contribution. With recent talk of a U.S. recession, market meltdowns, and
roller coaster stock prices, you may also be waiting for a better time to invest
your contributions in something other than a safe, low-yield money market
fund or GIC.
Here’s the scoop. There is no better time. It’s true that if you’ve been following
recent market news, or tracking your investment portfolio, it may not feel
like the best time. As the chart below shows, the movement of the Canadian
stock market over the past few months truly has been a roller coaster ride of
ups and downs.
When reading the doom and gloom
of today’s headlines, remember
two things:
G Bad news sells, and negative
investment news will always be
prominent – even in rising markets.
It may never feel like a good time
to invest if you follow investment
stories regularly.
G Headlines reflect short-term
events. Saving for your retirement
is a long-term project that demands
a long-term perspective.
The chart on the following page
shows how the Canadian stock
market has performed over the past
few decades. When you take a step
back and consider a longer-term
market view, you should gain some
comfort from the upward trend.
Source: GlobeFund
Continued
But history has demonstrated time and again that markets will rebound. And
if you keep your money parked on the sidelines in low-yield investments,
you’ll miss out on a substantial part of the gains when markets recover.
Group retirement services are provided by Sun Life Assurance Company of Canada, a member of
the Sun Life Financial group of companies. © 2007, Sun Life Financial. All rights reserved.
(cont’d)
Boost RRSP
contributions if you can
If you still have unused RRSP contribution room, there are two ways
that you can take further advantage
of the recent market decline:
Source: GlobeFund
That’s why it’s important to continue investing your RRSP money according
to your long-term plan. While holding cash and cash equivalents can be
useful for saving for short-term goals, their relatively low returns combined
with the effects of inflation make this a poor long-term strategy.
If you have an investment horizon of more than five years, you should
ensure that your RRSP contribution is working towards meeting your longterm financial goals. And for most people, that means maintaining a diversified portfolio that contains at least some longer-term growth investments.
With so many world stock markets slumping, this is a great time to follow
one of the oldest pieces of investment advice – buy low and sell high.
If you invested your recent RRSP contributions in short-term investments,
take advantage of the opportunity that lower prices present today, to invest
in funds with a longer-term growth potential.
Understand the investment mix
that’s right for you
While a diversified portfolio of stock, bond, and cash investments is ideal for
spreading the investment risk over many types of investments, the allocation
that you give to each type of investment will depend on your personal
situation and will include the length of time you have to invest and your
tolerance for the ups and downs of the investment market.
You may have already determined the investment strategy that’s right for
you, but if you haven’t done so, or it has been a few years since you last
looked at your investment strategy, Sun Life Financial’s Investment risk
profiler is a great place to start with a portfolio reassessment. To access
the Investment risk profiler, just sign in to www.sunlife.ca/member and on
the Home page, under my financial future, select my info Café for your
applicable account. Then:
G Under the Resource Centre drop-down menu, select my money tools.
G Under the Asset allocation tool, select Continue to proceed to
I Top-up your RRSP. If you have
the ability to make a lump sum
contribution, this is an excellent
time to boost the amount you can
invest at today’s lower prices.
Contributing a lump sum amount
also gives you a head-start on your
2008 RRSP contributions and
ensures you place a priority on
your retirement savings before you
spend the money on something else.
And don’t forget, every dollar you
contribute will be deductible on
next year’s tax return, so a contribution today may provide you with
extra cash at your disposal in 2009.
I Increase amount of ongoing
RRSP contributions. If you make
regular contributions to a group
RRSP by payroll deduction, consider increasing your contribution
amount, subject to your personal
RRSP contribution limits. You’ll
have more money invested and
working for you earlier in the year,
and you may be surprised at how
little you miss the additional
money that you are now investing.
i
If you have a general question or suggestion about
this newsletter, please send an e-mail to
can_pencontrol@sunlife.com or write to my money
At a Glance Newsletter, Group Retirement Services
Marketing, Sun Life Financial, 225 King Street West,
Toronto, ON M5V 3C5.
This bulletin has been created exclusively for you. It
addresses issues to help you with your financial
planning and investments, and cannot be
reproduced in whole or in part without the express
permission of Sun Life Financial.
the Investment risk profiler.
03/08-st-eo