Managed Money Reporter Newsletter — Issue 179, January 2002

Editors: Carl Spiess & Allan McGlade

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What to do in 2002 – RRSP Edition

It's a new year and if you are like the vast majority of Canadians, you may have left your RRSP contribution to the height of "RRSP Season" and are now wondering what to do. Here are four easy steps to take care of this year's contribution and gear up for next year's.

1. Get Your Money In ASAP

The RRSP deadline for your 2001 contribution is March 1st, 2002 but the sooner you get your money invested, the sooner it starts working for you.

If you don't want to make an investment decision immediately, no problem! Many of our clients 'park it' in cash or a money market fund until they can make a decision. Simply deposit your contribution to your RRSP, and wait until after the rush to make your investment choice. In most cases its best not to rush into a decision, especially when it comes to your retirement money. For your convenience we have included a handy RRSP order sheet.

Short on cash? Visit a local Bank of Nova Scotia branch to arrange an RRSP loan into your ScotiaMcLeod RRSP account. Preferential rates are usually given depending on your time horizon to pay back the loan. A great strategy is to use your tax refund to pay down the loan.

2. Revisit Your Asset Allocation

Your asset allocation should be reviewed regularly, so if it's been a while, please have us prepare a revised personal analysis for you.

We are seeing more and more research that indicates that a typical medium risk, growth oriented balanced portfolio should roughly have a 40% Bond, 30% International equity, and 30% Canadian equity asset mix, diversified by investment manager style (see pie chart, below). If you are closer to retirement, you should be heavier in bonds, and if you are farther from retirement, you should hold more equity.*

If you are uncertain as to the appropriate asset mix for you, just give us a call. We are here to help and advise.

3. Invest Your Contribution

Using your asset allocation as your guide use your contribution to add to areas where you have low exposure.

For the bond component, consider using our GIC shopping service, (we shop the best rates from 6 issuers) or consider government guaranteed stripped coupons like the example on the back page.

With global uncertainty, it is difficult to know where to invest the equity portions of your portfolio. And with the lackluster returns of late, it may be frustrating to look at the investments made over the last few RRSP seasons. In fact, the average Canadian Balanced fund has had a 4.5% average annual return over the last 4 years. The TSE 300 has averaged only 4.9% over 4 years and is actually down 14.5% over the last 12 months.

While you may be understandably reluctant to invest in funds that are down or moving slowly, a well-managed fund in a down market provides a tremendous buying opportunity. To take advantage of this slow market, we suggest you consider adding to some of the existing positions in your portfolio, especially those that may be down in the short term.

Our complete listing of all 1,000 available funds and their investment performance can be found at This link also includes our recommended list of mutual funds broken down by risk levels and different types of mutual funds.

Do not forget about Labour Sponsored Investment Funds (LSIFs), as featured in our last issue. They provide up to $1,750 in additional tax savings. Visit for more details.

4. Plan for Next Year

While you are talking to us, why not plan for next year now and avoid the next RRSP season rush.

Many of our clients contribute monthly to their RRSP through a pre-authorized cheque (PAC) plan. PAC plans not only make investing effortless for you, they are also a great strategy for getting you the best price when buying securities through dollar cost averaging. See our Investor Learning Centre for information on this and other topics of interest relevant to your personal investing needs.

Another option is to make your RRSP contribution early in the year (i.e. now for 2002 tax season) and get your money working for you that much sooner.

Both of these are great strategies to potentially increase your net worth at a faster pace. As a bonus, there will be no stress to make decisions or rush to get your cheque in next year.

Finally, please ask us to review your investments, and provide you with specific recommendations for your account. We look forward to your call at 1-800-387-9273 or 416-863-RRSP or your e-mail at

* This will vary depending on your personal risk tolerance.

Turn $50,000 into $113,206 with Stripped Bonds

Invest in Government Guaranteed Stripped Coupon Bonds with rates up to 6.2% (rates as of 01/03/2002).


Maturity Date


(subject to change)

Yield to Maturity

Maturity Value











British Columbia










Example: $50,000 / $441.67 * $1,000 = $113,206.69

Please note that stripped coupons cannot be purchased through payroll/bank deductions (min. purchase $5,000 maturity value). Clients can however accumulate funds to purchase the coupons by purchasing the no-load Scotia Money Market or T-Bill funds which can be sold at no cost.


Contact Us

T.  416.863.RRSP (7777)
F.  416.863.7479

ScotiaMcLeod is a division of Scotia Capital Inc., member of CIPF.

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The Spiess McGlade Team is a personal trade name of Carl Spiess and Allan McGlade.