The Vault
Grow your RSP by diversifying your investments
by Graham Barber

There’s an old saying about investing that happens to be true; don’t put all your eggs in one basket. In other words, you should diversify. This means that instead of investing all of your money in just one or two places, you spread it around across many different types. But spreading your money around doesn’t have to be complicated.

One of the easiest and most convenient ways is what Scotiabank special advisor and best selling financial author, David Bach, calls The Perfect Pie Approach to diversification - a boring investment approach that puts the excitement where it should be, in your lifestyle. David recommends that investments fall into three categories;

Real Estate - This can be the investment in your home, rental properties and real estate mutual funds

Equities - You can choose equity investing such as diversified equity mutual funds

G u a r a n t e e d Investments - This gives you fixed interest earnings you can count on to provide balance and stability to your portfolio, such as bonds, GICs and savings accounts.

Next to the investment in your home or other real estate, taking advantage of

the long term growth potential of equities (stock market), is essential for any RSP, because of the market’s historical higher rates of return.

Investing in the stock market doesn’t have to be complicated. To keep your equity investing simple, you can choose a one step solution by investing in a balanced or asset allocation mutual funds, which is already diversified for you, and provides an appropriate mix of equities and fixed income investments. Investment experts, who are experienced in asset allocation and equity selection, manage the portfolio for you.

When you contribute automatically and regularly into a mutual fund, you take advantage of dollar cost averaging, which can reduce the average cost of your investment over time. Dollar cost averaging can improve your year end investment value when you contribute regularly, compared with making a single, year end lump sum contribution.

Talk to your Scotiabank representative to determine the best investment approach to meet your goals.

The proceeding information was provided by Graham Barber, Branch Manager of Scotiabank, Alcona Branch. The Scotiabank, Alcona Branch, is located at 1161 Innisfil Beach Road, (705) 431- 6116.

The Vault is a weekly series of articles provided by Graham Barber with financial advice and suggestions.