Top Money Managers Reveal Best Long-Term RRSP Investments for 2023

The registered retirement savings plan (RRSP) deadline is fast approaching on March 2 for Canadian investors looking to deduct contributions from their 2025 income. As they prepare, selecting the right investments within their RRSP is crucial for achieving long-term financial success. Leading financial advisors share recommended strategies for making the most of your investments in 2023.

Invest in Long-Term AI Stocks

One key area to focus on is the transitioning landscape of artificial intelligence (AI). Winnie Go, a senior wealth advisor at Scotia Wealth Management in Toronto, anticipates continued growth in technology stocks driven by AI advancements. Despite a recent downturn in some tech stocks, she emphasizes the importance of investing in robust companies.

• Recommended stocks include Microsoft Corp. (MSFT) and Amazon.com Inc. (AMZN).
• Investors should consider sector-specific exchange-traded funds (ETFs) like Vanguard Information Technology Index ETF (VGT) to manage volatility.
• A fixed-income component, such as investment-grade bonds, is advisable to guard against stock market fluctuations.

Diversify with Technology

Allan Small, a senior investment advisor, echoes the sentiment of capitalizing on the AI boom. He stresses the importance of not simply buying and holding but actively managing investments.

• Investors should set targets and re-evaluate portfolios when those goals are reached.
• His recommendations for diversified tech investments include Alphabet Inc. (GOOG) and Microsoft, companies deeply engaged in various AI applications.

Broaden Your Horizons

Considering the U.S. market’s performance, Michael Bonomo, a certified financial planner, suggests diversifying beyond U.S. mega-cap stocks like Microsoft and Amazon. He believes reducing exposure to these stocks can minimize risk during potential market corrections.

• Bonomo recommends Fidelity Investments Canada’s All-in-One suite of ETFs, which offers allocation across global markets.
• Options trading is a less common but effective strategy for RRSP portfolios, providing income while capping downside risks.

Utilize Options for Income

For investors interested in options, Bonomo recommends the Dynamic Premium Yield Plus Fund. This fund manages cash-covered calls and puts associated with large-cap stocks like Netflix Inc. (NFLX) and Nvidia Corp. (NVDA).

• The fund currently yields approximately 10% after management expenses.
• Returns typically exceed those of bonds, though they may underperform compared to stocks over time.

In conclusion, as the March 2 RRSP contribution deadline approaches, investors are encouraged to consider these comprehensive strategies. By diversifying their portfolios and investing in long-term growth sectors, Canadians can better prepare for their financial futures.