Retirement savings

[Trying2save]

Hi everyone,

I have some basic questions about retirement savings. I'm in my mid 20's and have about $7K saved in an RRSP (I'm in Canada). The thing is this account is simply a RSP savings account, not invested in mutual funds or stocks. It's with ING and the interest rate is about 1.35%

I'm thinking I want to invest at least $5K into a mutual fund RRSP, would this be a wise choice? I don't know much about stocks etc, and how the commissions work etc. I'm trying to educate myself with all this financial investor stuff but having a hard time doing so.

I figure I have a lot of time left until retirement should I should be investing and getting 5-8% in the market instead of the lousy 1.35%.

Thoughts?

[snafu]

No one cares about your money more than you. There are many avenues to explore for your RRSP but understand from onset there are several levels of risk. Even your ING a/c has risk as that low rate of interest is not keepng up with inflation.

I suggest you read Wealthy Barber, Mutual Funds for Dummies or ask for suggestions at your local library. Make an appointment with the Mutual Fund [MF] salesperson at your own bank. They can give you Morningstar print outs of their funds and show you how to compare them with other funds of the same type. For example ask to compare the Dividend Fund of the 5 Big banks and 5 large MF companies [Fidelity, Franklin Tempelton, Trimark, McKenzie etc.] Check and double check the MERs. Those are the fees that pay their salary/commission. RRSPs are transferable to other institutions. When you have a bit more invested, and are comfortable with MF, you can move it to a self directed plan and insist the bank waive their fee.

The Stock Market is a rollercoaster just now and the Bond Market is full of danger signals. If I were in your shoes, I would go into MF slowly. You do not need to put all your $7K into one or more funds at one blow. You can DCA [dollar cost averaging] @ a set amount each month. Depending on unit cost, you will buy more units when the cost is low, less units when the cost is higher. Your Bank's representative can explain this and their fee structure in detail.

At your age you could take higher levels of risk as you have longer to recover. I suggest you get help to create a plan that is a minimum of 5 years and do your best to stick to it. If your fund value goes down, think of it as 'on sale.' In my opinion, good stocks have been beaten to a pulp along with the rotten so I am sticking to my 5 year plan.

hope you find something here helpful

[Trying2save]

That you for that great advice. I will definitely speak to someone at my bank, and get myself on a better plan.

Thanks again

[Seeker]

I don't know too much (read as "I know nothing") about banks in Canada, but I'd advise you to look closely at the "expenses" side of whatever they offer you.

It is an unfortunate truth that the people in banks (at least here in the US) are really interested in making a sale. The expenses they charge are theirs whether or not the investment gains or loses.

You'd be better advised looking at Vanguard, TRowe, or Fidelity if they are available in Canada.

[LivingAlmostLarge]

My DH in canada used to invest in Altavista mutual funds. Cheap and good.

[Ima saver]

i would definately look into investing in Vanguard funds. They are no load (commisssion) and very low fees. I have been with them for over 20 years.