Episode #12 - Two Minutes to a Better RSP: Two Minutes to a Better RSP: Going Global
Announcer: Welcome to The Money Clip podcast series from The Vault, Scotiabank’s online guide to helping Canadians get ahead financially. Listen in to gain a deeper understanding of your personal finances and find out how a few small changes to the way you manage your money can make a big difference.Michael Seaton: Thank you for joining us on The Money Clip podcast series from Scotiabank. I’m your host, Michael Seaton, and with The Money Clip we provide Canadians with a deeper understanding of personal finance and money-related matters. This is our series titled “Two Minutes to a Better RSP”. We hope to put you on the path to understand how to maximize your retirement savings plan as the deadline approaches. This is our sixth episode in the RSP series, and our subject today is going global in your RSP. In our last Two Minutes to a Better RSP, we spoke of the importance of diversification by asset class. Another important way to be diversified is by geography. This is especially true for Canadian investors. That’s because our market represents only three per cent of the world’s investment opportunities. If you were to limit your RSP to Canada, you’d be exposed to the fortunes of one small market. And there are other good reasons to diversify globally. Canada’s stock market is heavily concentrated in the resource and financial sectors. Staying too close to home may mean you miss out on opportunities in health care, information technology and consumer sectors, for example, which are better represented in the U.S., Japan and Europe than they are in Canada. There’s no limit to the amount of global investments you can hold in your RSP and, to achieve adequate diversification, many investment experts recommend a level of 20 to 30 per cent. But that depends on your goals and your tolerance for risk. For most of us, mutual funds are the easiest and most convenient way to gain global exposure. You gain broad diversification and professional management and can choose from funds that invest in a particular country, region or market sector. Expert advice from your financial advisor can help you take advantage of global opportunities in your RSP.
This has been another Two Minutes to a Better RSP podcast. Keep listening for more in this series as we take two minutes to review tips and suggestions to reach your retirement goals. Thank you for listening.
Announcer: Do you have any thoughts on today’s show? We’d love for you to get involved and become part of the conversation. Send us your questions, comments or money management tips so that we can address them in future podcasts. Our email address is themoneyclip@scotiabank.com and our call-in number is 1-866-652-5333. The Money Clip is brought to you by The Vault at Scotiabank. Be sure to tune in again next time.