What You Should Know About RRSPs

By Lisa Xing
[Personal Finances]
Are you reluctant to invest in RRSPs because you don’t understand them?  Lisa Xing gives you a basic rundown of how they work.
There are some important factors you must keep in mind as you go ahead with an RRSP, like what kind of RRSP to open and why.  You should also know a little bit about the fees involved with an RRSP, the kind of management you get once you open an account and what to do if you decide to manage your account by yourself.

Managed Account

The first decision to make after you decide to open an account is whether or not the account will be managed or self-directed.  A managed account is a government-registered bank account that holds investments like GICs (Guaranteed Investment Certificates) and mutual funds.  It can also hold bonds, gold bullion or equities.  This is probably something to discuss further with your bank, because someone will most likely be helping you manage your account and can tailor this to your specific finances.  Cheaper RRSPs are usually investments in mutual funds, but again, your financial advisor will help you with this.

Self-Directed Account

A self-directed account gives you the freedom to manage your RRSP yourself instead of letting someone manage it for you.  This means a lot more decision-making and responsibility on your part.  However, this also gives you a fair bit of autonomy and control, despite having to really be informed about your options.  Again, it’s good to discuss this with someone in person so you can thoroughly evaluate your options.
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