The Canadian equivalent of individual retirement accounts in the U.S., RRSPs permit tax-deductible contributions and taxable distributions; contributions are tax-deferred until retirement. The plans may invest in securities and fixed income vehicles.
In addition to mutual funds, the study reveals that Canadians are building their RRSPs with Guaranteed Investment Certificates (GICs) (21 per cent), cash (20 per cent), stocks (11 per cent), bonds (nine per cent) and Exchange Traded Funds (ETFs) (four per cent).
The study adds that Canadians invest in mutual funds for several reasons, including:
- They are professionally managed (30 per cent)
- They invest in a variety of companies or holdings (28 per cent)
- They have strong growth potential (26 per cent)
- There is a wide variety from which to choose (22 per cent)
When asked about what type of mutual fund in which they would like to invest (whether inside or out of an RRSP), 81 per cent say they favor income-generating funds. Canadians’ second choice is mutual funds that gradually become more conservative as the investor approaches his/her life goals (76 per cent).