A significant portion of Canadians, nearly 60%, contribute to a Registered Retirement Savings Plan (RRSP) on an annual basis, with an average contribution of around $3,700. The appeal of RRSP lies in its tax-deferred growth, allowing investments to grow without being taxed until withdrawal.
However, despite the advantages, only about 25% of Canadians maximize their RRSP contributions each year. This lack of full utilization means missing out on potential long-term growth and tax benefits. The average RRSP balance for Canadians close to retirement (ages 55-64) is approximately $120,000, which might not be enough to support a comfortable retirement. This underscores the importance of consistent and early contributions for retirement planning.
To bridge the gap, investing in top-performing stocks can be a solution. One such option to consider is a Canadian bank with attractive prospects for RRSP investors. This bank, despite facing challenges and experiencing a decline in share value in the past year, presents an opportunity with its low price-to-book (P/B) ratio. Additionally, its forward-thinking approach, indicated by a favorable forward price-to-earnings (P/E) ratio and a high annual dividend yield, suggests potential for income generation within an RRSP.
Another option to explore is a real estate investment trust (REIT) that offers stability and steady performance for RRSP investors. With a market cap of $3.39 billion and a beta close to 1, this trust aligns well with a long-term retirement strategy. Its reasonable valuation metrics and strong fundamentals, paired with a generous annual dividend yield and a reliable payout ratio, make it an appealing choice for income-focused investors within an RRSP.
Despite minor fluctuations in performance, both these investment options show resilience and potential for long-term growth and income generation, making them suitable additions to a well-rounded RRSP portfolio.
