Self Directed RRSPsSelf directed RRSPs Quite often we will hear people say “Yeah I bought an RRSP this year”. Which is incorrect, an RRSP is a registered account not an investment. What folks really mean is they made a contribution to their RRSP. Some folks like the idea of controlling their investments completely by themselves. without the aid of a financial planner. This is where a self directed RRSP comes in. With a self directed RRSP. You the account holder are responsible for the investments within it. It’s your decision, thus the reason why it’s called “self-directed”. It’s the type of account that attracts the ‘hands on’ investor who wants to control their own investments. If this is you these accounts make perfect sense. How to Start a Self Directed RRSPMost financial institutions have self directed RRSPs available. Often all you have to do is request one, fill out the forms and choose your investments. In recent years the need for a self directed RRSP doesn't seem to be as great or as big as an advantage it once was. Many years ago when the best mutual funds from different asset classes existed with different mutual fund companies. A self directed account made sense. You could have a mixture of these different mutual funds altogether on a single consolidated statement, making it easier to read, understand and keeping the avalanche of reports, statements and other paperwork at bay. Today this need is not so great.Self-Directed RRSPs usually have annual trustee fees tied to them. The financial institution collects this fee for administrative costs of overseeing the RRSP. Which is over and above the Management Expense Ratio MER charged by all mutual funds. These accounts have there place, but with so many mutual and segregated fund dealers providing consolidated statements for clients. There just isn’t the need there once was. If your RRSP accounts consists only of funds -- Mutual or Segregated there really is no need for this type of account. Return from Self Directed RRSPs to Retirement Savings Accounts
Terry Johnston J C Mitchell Financial Services Inc. Phone: 866-721-7781 ext. 232 |
