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We’ve explained what Registered Retirement Savings Plans (RRSP) are in the past and why you should have them. What you may not have known is that RRSPs can be both self-directed and basic. But what does that mean?

If you’re an investor who’s considering alternative investments, reads and educates yourself on market trends, and generally takes a more hands-on approach to your investments, a self-directed RRSP may be for you. 

 

What Is a Self-Directed RRSP?

 

A self-directed RRSP is an account that gives you more control over the assets within the account itself. This is a kind of Do-It-Yourself (DIY) investing. Instead of simply putting money into the account and having an investment manager handle the portfolio, you as the account holder are choosing where to invest your money and building your own portfolio. This level of control and freedom allows you to look at a wider range of investments and hold multiple types of investments within a single self-directed account. 

This doesn’t mean that you can start putting any and all styles of investments into this account. There are some kinds of investments that are allowed in RRSPs and some that aren’t. A self-directed RRSP still adheres to these regulations. 

 

What to Remember When Directing Your Own Portfolio:

 

  • Diversification is key.
  • Know your fees.
  • What is your risk tolerance?
  • Can you take emotion out of the equation when managing your own portfolio?

 

Fees

The big thing that many investors forget to review is the fees associated with self-directed RRSPs. Just because you’re choosing the investments and building the portfolio doesn’t mean the fees will necessarily be lower. 

Many self-directed RRSPs through institutions and banks have set up fees, buying and selling fees, annual trustee fees, or fees for advice you may need. Ask about fees before you set up a self-directed RRSP. 

 

What Are the Benefits of a Self-Directed RRSP?

 

1. Consolidated Statements

If you have a complex investment portfolio with a lot of diversification, having all these investments in a single account can streamline your statements. 

 

2. Product Consolidation

Managing your own RRSP can help you to see how many institutions you deal with and how many investments you’re juggling. This broad picture approach may cause you to re-evaluate your investment strategy and consolidate things for your benefit. Diversification is vital to a successful investment plan, but over-diversification is a common issue that can create an administrative nightmare, investment duplication, and confusion. 

 

3. Wider Range of Product Selection

With a self-directed RRSP, you’re able to invest in traditional products such as stocks, bonds, mutual funds, and ETFs, but you’re also able to invest in mortgage investment corporations (MIC), small business corporations, and other alternative investment types. You’re also not limited by the products that one given company often deals with. 

 

At Cooper Pacific, we offer self-directed RRSPs with no fees. That means no annual fees, no transfer fees, and no withdrawal fees. Your money is yours to organize, invest, and keep — unlike with other Exempt Securities and financial institutions. To learn more about our offerings and how to set up a self-directed RRSP, get in touch with Jordan on our team today.