Episode #14 - Two Minutes to a Better RSP: Long-Term Vision
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 eighth episode in the RSP series, and our subject today is seeing your RSP as a long-term commitment. When you have some of your RSP investments in the stock and bond markets, your portfolio is going to experience some ups and downs. Understandably, this can be unnerving to some investors. Indeed, when the markets are volatile, many investors consider moving to safer investments. As part of a diversified portfolio, your RSP should contain some secure investments, such as GICs and high-interest savings accounts. But your RSP also needs some growth potential, such as equity mutual funds, to stay ahead of inflation. That’s why building a diversified portfolio and taking a long-term view of things and staying the course are some of the best ways to manage volatility. Market volatility may be a fact of the investment world, but so is growth potential and, over the long term, the direction of the markets has been up. There’s even a way for mutual fund investors to use market volatility to your advantage. Such as, when you contribute to your RSP on a regular basis – that is, every month – you end up buying fewer fund units when prices are high and more units when prices are low. Over time, this can reduce the actual cost you pay for your mutual fund investments; and this powerful strategy is known as “dollar-cost averaging.” Expert advice from your financial advisor can help you stay the course to reach your retirement goals and help you get on track and stay there for the long haul.
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.