Market volatility doesn’t faze most RRSP investors, RBC poll finds
A majority of RRSP investors (60 per cent) are not concerned about market volatility and the number of Canadians who are planning to contribute to their RRSP is unchanged from 2006 (49 per cent), according to the 18th annual RBC RRSP poll. Among the 40 percent of those polled who are worried about market volatility, more than half (54 per cent) stayed the course and did not make changes to their investments.
Current market fluctuations may feel more severe because equity markets experienced a period of unusually low volatility between 2003 and mid-2007. During that period, there were only a handful of days when the market moved up or down by more than two per cent. Despite the changing market dynamics, most investors remained calm.
“Investment discipline pays off in the long run and it’s great to see that Canadians are making decisions that will help keep their RRSP plans on track,” said Kim Buitenhuis, vice president, RBC Asset Management Inc. “We believe investing should be based on core principles that can help you succeed in all types of markets, regardless of what happens during a given day, week or month.”
While it is also advisable for many Canadians to maximize their RRSP contributions, only three in ten plan to do so for the 2007 tax year. For some, finding the cash for a single lump sum RRSP contribution is a challenge.
“There are many benefits to setting up a regular investing program. Dollar cost averaging (buying regular amounts every month or week) also limits exposure to market volatility and it allows investors to purchase more units of a mutual fund when markets are down and less when markets are up. This discipline pays off in the longer run,” added Buitenhuis.
2007 RRSP FAST FACTS
* More than two in three Canadians have an RRSP (68 per cent), up from 57 per cent in 2002.
* Nearly half of Canadians (49 per cent) have contributed to or plan to contribute to an RRSP for the 2007 tax year. This figure is unchanged from 2006.
* Many Canadians are waiting until the last minute to contribute to their RRSPs. Nearly one in three (32 per cent) of those who plan to but have not yet made an RRSP contribution expect to do so just before the February 29th, 2008 deadline.
* The average planned RRSP contribution for the 2007 tax year is $5,967, which has doubled since 1993 ($2,866).
* Among Canadians who have an RRSP, the average value of their personal RRSPs is $72,481. This figure is highest in B.C. ($88,534) and lowest in Quebec ($49,621). Those over 55 have an average of $102,628 in their RRSPs.
* Only three in ten Canadians plan to maximize their RRSP contribution for the 2007 tax year.
* Only one in three RRSP investors (33 per cent) are making regular contributions through a plan.
* Mutual funds remain the most popular RRSP investment choice for the 2007 tax year. More than half of the RRSP investors polled (55 per cent) plan to make their RRSP contribution by purchasing mutual funds.
* Most Canadians (58 per cent) get the help of a professional financial advisor when making decisions about their RRSPs and other investments and among those who are over 55 years of age, this figure rises to 66 per cent.
* More than one in ten Canadians (13 per cent) plan to use a discount brokerage to make their RRSP contribution.
The 18th Annual RBC RRSP Poll was conducted by Ipsos Reid from October 23 to November 5, 2007. The telephone survey was based on responses from a random sample of 1,200 Canadian adults (aged 18 and over). With a sample of this size, the results are considered accurate to within ±2.8 percentage points, 19 times out of 20, of what they would have been had the entire adult Canadian population been polled. The margin of error will be larger within regions and for other sub-groupings of the survey population.
About RBC Asset Management
RBC Asset Management Inc. is an indirect, wholly owned subsidiary of Royal Bank of Canada. RBC Asset Management Inc. provides a broad range of investment services to investors through mutual funds, pooled funds and separately managed portfolios. With offices in major financial centres around the world, RBC Asset Management Inc. is one of Canada’s largest money managers and has over $87 billion in assets under management.
The RBC Asset Management mutual fund family was awarded the “Best Overall Fund Group” in Canada for 2007 by Lipper Inc. The prestigious award is part of a global program of events held by Lipper in 21 countries to highlight funds and fund families that excel in delivering consistently strong risk-adjusted performance relative to their peers. Visit our website at www.rbcam.com.
RBC Asset Management is part of RBC Wealth Management which directly serves affluent and high net worth clients in Canada, the United States, Latin America, Europe and Asia, provides asset management and trust services through RBC partners and third-party distributors and has over $500 billion of assets under administration, 3,500 financial advisors and $150 billion of assets under management.
Rina Cortese, RBC Wealth Management, (416) 974-6970
Jackie Braden, RBC Media Relations, (416) 974-2124
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