I’ve revamped my RRSP strategy several times over the last few years but now the goal is crystal clear:  Use up all of my unused RRSP contribution room within two years and then contribute enough each year to max out my RRSP going forward.

Contributing to a defined benefit plan at work means I receive a pension adjustment, which reduces the amount I can contribute to an RRSP to about $3,000 per year.  But after 10 years working in the private sector I had nearly $50,000 in unused contribution room.

Related: My RRSP Update From 2013

A $20,000 RRSP loan, plus another $6,000 in regular contributions last year whittled away most of my unused contribution room.  Now the unused room is down to about $10,000 – within striking distance for the next 12-24 months.

This year’s increased contributions led to a lot of purchases within my RRSP account.  Here’s what I’ve done with my cash over the last 12 months.

  • Bought 70 shares of Canadian Oil Sands in May, 2013
  • Bought 125 shares of Rocky Mountain Dealerships in June and 150 shares in August, 2013
  • Bought 50 shares of Potash Corp. in November and 50 shares in December, 2013
  • Bought 140 shares of Liquor Stores in December, 2013
  • Bought 300 shares of Bird Construction in December, 2013
  • Bought 100 shares of Emera in December, 2013
  • Bought 100 shares of RioCan in December, 2013
  • Bought 40 shares of Agrium in December, 2013
  • Bought 100 shares of Canadian Natural Resources in December, 2013
  • Bought 125 shares of Rogers Sugar in January, 2014
  • Bought 100 shares of Dorel Industries in March, 2014
  • Bought 100 shares of Suncor in March, 2014

I like to buy shares in blue-chip companies that increase their dividends on a regular basis.  I believe these types of companies will deliver the highest returns over a long period of time.

RRSP Portfolio

Here’s a look at my RRSP portfolio as of March 14th, 2014:

Symbol Shares Book Market Dividend/Share
AGU 40 $3,825 $4,152 3.20
BMO 90 $5,036 $6,478 3.04
BNS 45 $1,919 $2,896 2.56
BCE 80 $1,962 $3,747 2.47
BDT 300 $3,721 $4,056 0.76
CM 32 $1,929 $3,026 3.92
CNQ 100 $3,440 $3,965 0.90
COS 210 $4,275 $4,473 1.40
DII.B 100 $3,710 $3,710 1.32
EMA 100 $2,988 $3,348 1.45
EMP 60 $3,544 $3,948 1.04
FTS 100 $2,928 $3,127 1.28
GWO 150 $3,949 $4,530 1.23
LIQ 300 $3,823 $3,435 1.08
POT 100 $3,365 $3,765 1.49
REI.UN 230 $4,011 $6,086 1.41
RME 275 $3,511 $3,165 0.40
RSI 575 $3,396 $2,576 0.36
SNC 100 $3,939 $4,630 0.96
SJR.B 100 $2,038 $2,573 1.02
SU 100 $3,643 $3,621 0.92
T 170 $2,698 $6,559 1.44
TRP 60 $2,274 $2,963 1.92
CASH $1,649 $1,649
Total $77,574 $92,478

This portfolio currently spins off $3,868 in dividends each year, and the dividend increases for many of these companies have come in fast and furious over the last 12 months.  Unfortunately, a rough year for companies like Rogers Sugar and Liquor Stores could put their dividend in jeopardy.

Related:  The Pitfalls Of Chasing High Yield Stocks

RRSP plan moving forward

My original plan was to contribute $6,000 to my RRSP last year and $12,000 this year.  But since I took out a $20,000 RRSP loan to top-up my contributions last year, it meant I’d have zero contributions this year as I paid back the loan.  That’s okay because $26,000 > $18,000.

I’ll take a look at this at the end of the year and determine whether another RRSP loan makes sense to finish off the remainder of my unused contribution room.  I figure that I’ll catch up within the next year or two and then I can shift focus toward maxing out our tax free savings accounts.

In the meantime my RRSP portfolio will continue to grow.  Starting at today’s value of $92,000, and factoring in contributions of $3,000 per year at an eight percent annual rate of return, this portfolio will grow to $566,000 by the time I’m 55 and reach $849,000 when I’m 60 years old.

RelatedRRSP Over-Contribution Rules

The goal is to fill up three buckets of income – my pension, RRSP, and TFSA – that will give me the option to retire comfortably at an early age.

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40 Comments

  1. Dan @ Our Big Fat Wallet on March 16, 2014 at 8:11 pm

    Looks very similar to my portfolio, just a bit larger. I own Rogers Sugar as well but I’m hoping they can continue their dividends. An RRSP loan is definitely something I will look at next year as I still have a bit of contribution room. I asked my bank about the interest rate for an RRSP loan this year and they quoted 4% for an RRSP loan, not sure how that compares to others

    • Echo on March 16, 2014 at 8:20 pm

      @Dan – I got 4 percent as well for the loan, which is fine as long as you pay it off quickly. You can get a HELOC for slightly cheaper (3.5 percent) and that would also do the trick.

  2. Bernie on March 17, 2014 at 6:18 am

    You have a good mix of dividend growers in your RRSP but your content is 100% Canadian. Any reason why no U.S. or international exposure?

    • Echo on March 17, 2014 at 6:43 am

      @Bernie – It’s a home country bias that I need to get over.

      • Bernie on March 17, 2014 at 7:46 am

        @Echo
        There’s a multitude of outstanding dividend growers outside of Canada. Many have been outperforming Canadian stocks.

      • Money Saving on March 18, 2014 at 9:32 am

        I think you have the potential to really hurt yourself in the long run by being 100% allocated to Canada. You will lose 1%-2% annually by not being able to re-balance globally…

        Also, any reason why you are not using index funds? It’s great that you’re saving, but I think you’re taking on a lot of risk that you aren’t being compensated for with only Canadian companies.

        • Bernie on March 18, 2014 at 10:28 am

          @Money Savings-
          Echo is a DIY investor. Index investing is more a “couch potato” style that covers all bases but doesn’t expect anything other than market returns. Echo’s return in 2013 was quite similar to a global balanced index return (Global Couch Potato) but in the long run his portfolio should handily beat this index.

          I realize my current 55% Cdn, 40% US & 5% Int’l DGI portfolio had a good year in 2013 with a 24.33% return but backtesting shows my mix of current stocks averaged 20% per annum going back to 2002. This period covers the latest bull market & two recessions. A Global Couch Potato portfolio averaged 5% through this period.

          DGI isn’t for everyone as it is a patient, disciplined DIY approach that needs to be studied & learned. It can be volatile but not as much as equity indexes as DG stocks are lower beta. I’ve followed this style of investing in 2008 since I went DIY. I wouldn’t have it any other way. It works very well for me but isn’t for everyone.

  3. CanTex on March 17, 2014 at 7:05 am

    Be careful what you wish for. We’re at the other end of the spectrum, having to take RRIF payments for Canadian investments and Required Minimum Distribution payments from our IRAs in the U.S. The tax bite hurts big-time and will get bigger every year. Sure, it’s a nice problem to have, but in hindsight we should have done better tax planning. Like more conversions to Roth IRAs and less contributions to retirement plans as the years moved along.

    Just sayin’.

    • Echo on March 17, 2014 at 7:14 am

      @CanTex – I understand you’re point. I’d like to figure out a strategy that allows me to withdraw from my RRSP between the ages of 55-64 and shelter some of that money in our TFSAs before my pension kicks-in.

      • CanTex on March 17, 2014 at 7:32 am

        Not sure how TFSAs work because non-residents aren’t eligible, but should the order of priorities be to max out your TFSA before contributing to an an RRSP? Not to forget paying down debt in there somewhere too.

        • Echo on March 17, 2014 at 9:25 am

          @CanTex – It all depends on your current tax rate. Right now it makes sense for me to max out my RRSP and then move to my TFSA. Down the road I’d like to wind down the RRSP and put more into my TFSA because withdrawals from that account are tax free and do not affect eligibility for OAS.

  4. Gary on March 17, 2014 at 7:53 am

    that is quite an extensive portfolio robb. i only have 15 tems in ours but it does include some us conglomerates: i.e.:ko. please don’t forget your tfsa’s — i wish we had had them available when we where saving! it would be nice to have a tax free withdrawal available for large purchases such as a car. health and happiness to you all!

    • Echo on March 17, 2014 at 9:26 am

      @Gary – Not to worry, we’ll get to our TFSAs eventually. Only so much $ to go around and too many priorities at this stage in our lives.

  5. Mclain on March 17, 2014 at 8:31 am

    I maxed out my TFSA this year and now I will tackle my RRSP. I have no problem making the max yearly contribution but I still have a lot of unused room to make up.

  6. BetCrooks on March 17, 2014 at 1:32 pm

    Just curious: did you contribute to a personal RRSP or a spousal? I don’t know your numbers (obviously!) but I would think a spousal might be helpful if you decide to take “early” retirement before you can income split at 65.

    Also, just so others are aware, Suncor only recently started paying a respectable dividend. If you look at its history, it paid the same pittance from 1996-2003 without a change and didn’t pay much of anything till mid-2013.

    My belief is that ever since the PCan takeover, it’s been dead in the water, and it wanted to stir up investor interest. (Says a frustrated owner of PCan stock which used to be growing steadily before Suncor took it over.)

    • Echo on March 17, 2014 at 2:47 pm

      @Bet Crooks – This was in my personal RRSP. I do need to consider a spousal RRSP in the future to help with the options as we get closer to retirement.

      Warren Buffett bought a big stake in Suncor last year – they upped their dividend big time in the last year as well.

  7. Matt on March 17, 2014 at 3:29 pm

    You have way too much Canadian exposure and a lot of these companies are not blue chips. You need much more exposure to US multinationals. Your TFSA will want to be Canadian only so invest in some of these companies in there if you must. My feedback 🙂

    • Echo on March 17, 2014 at 3:40 pm

      @Matt – Thanks for your feedback. The portfolio is meeting my goals for now – https://boomerandecho.com/2013-portfolio-rate-of-return/

      • Matt on March 17, 2014 at 3:57 pm

        You are a DGI are you not? Why do you offer proof of your success with a short term return with no mention of dividend growth? Also, a lot of your selections do not increase dividends regularly and you have a basket of smaller cap companies where the only real appeal can be the yield itself. You are chasing yield and you will get burned as you are already starting to see. It’s your money but be wary, your stated strategy of buying blue chip companies is not reflected in your portfolio in too many cases.

        • Echo on March 17, 2014 at 4:19 pm

          @Matt – Of the 23 stocks in my portfolio, RioCan, Liquor Stores, and Rogers Sugar are the only ones that don’t regularly increase their dividends.

          Rogers Sugar paid out a special dividend last year, and Riocan bumped up its distribution as well. Liquor Stores might be in trouble, I admit.

          • Matt on March 17, 2014 at 5:07 pm

            Liquor stores and Rogers sugar are both in trouble.



          • Matt on March 17, 2014 at 5:10 pm

            COS also does not regularly increase it’s dividend.



          • Matt on March 17, 2014 at 5:14 pm

            GWO hasn’t raised it’s dividend in three years.



          • Bernie on March 17, 2014 at 6:05 pm

            GWO lasted raised their dividend 6 years ago, COS 2 years ago.



        • Gary on March 18, 2014 at 7:57 am

          ok, i give up. whats a DGI (darn good investor)?

          • Echo on March 18, 2014 at 8:48 am

            @Gary – DGI = Dividend growth investor.



        • Don on March 18, 2014 at 6:19 pm

          Matt, nothing wrong with his portfolio, in my opinion. As for GWO, I’ve held it since it was $26 and it’s yield is still 4%. Doesn’t seem to be much of a problem.

      • Bernie on March 17, 2014 at 4:18 pm

        I agree with Matt. Echo, you’re leaving quite a bit on the table by limiting yourself to Canadian stocks. I’m also a DGI with approx. 40% US stocks in my RRSP. I returned close to 25% in 2013 with a 12% DGR overall. Remember, there is no withholding tax on US, UK & a handful of other country dividends if held in an RRSP!

        • Echo on March 17, 2014 at 4:24 pm

          Last year was great for US stocks but the two countries produce surprisingly similar results over the long term – http://www.getsmarteraboutmoney.ca/tools-and-calculators/interactive-investing-chart/interactive-investing-chart.html

        • Matt on March 17, 2014 at 5:10 pm

          Yes, US diversification is best done within the RRSP for sure, or unregistered. Not TFSA.
          The Canadian market represents less than 3% of the world economy and is heavily weighted to financials and commodities. You simply can’t properly diversify your portfolio sticking only with Canada.

          • Don on March 18, 2014 at 6:25 pm

            “You simply can’t properly diversify your portfolio sticking only with Canada.”

            I’ve never bought that argument because I live in Canada. I also found over about 30 years of investing that Canadian stocks tend to be more stable.

            Financial stocks in the US were eviscerated during the melt-down, and really haven’t recovered. All our banks are higher than they were back then and have increased dividends. You also have to contend with currency movements. The US dollar may be stronger than it was a few years ago, but it is still weaker than it was in 2007/2008.

            There is nothing wrong with being safe in Canadian securities.



  8. Echo on March 17, 2014 at 9:10 pm

    We all know what happened to the banks and insurers after the financial crisis. Things are finally looking up on the insurance side, so hopefully GWO is in a position to start raising dividends again.

    I’d love to add a railway to the mix, but not at these levels.

    This is a work in progress, gents.

    • BetCrooks on March 18, 2014 at 7:36 am

      Everyone loves to pick apart someone else’s portfolio. It’s like “helping” someone play solitaire: it’s fun!

      Really if you’re saving and investing instead of spending and getting stuck in debt, you’re doing better than half the population already.

      • Money Saving on March 18, 2014 at 9:39 am

        Good point! It is easy to criticize when it is someone else 🙂

        For more on how to really maximize your results with as little risk as possible, I’d suggest a Random Walk Down Wall Street or the Four Pillars to Investing.

        I think these books have really opened my eyes to the fact that you want to be diversified globally to minimize your risk.

        You will probably come out fine in the long run, but if Canadian stocks take a nose dive compared to everywhere else, will you have the fortitude to weather the storm? This is what being diversified globally can help you with…

        • Bernie on March 18, 2014 at 9:54 am

          @Money Saving-
          Echo is cherry picking so his entire portfolio will not fall (or rise) in unison with the Canadian market. Not all of his stocks are on major indexes.

  9. The Passive Income Earner on March 18, 2014 at 1:06 pm

    I also thought you should have some US in your RRSP. When the CDN $ was on par, it was a good time. Now there is a bit of a premium …

    My RRSP Dividend Portfolio is 90% in US.
    My TFSA is 100% in CDN.

    How much stocks do you think you’ll buy total? When do you think you will start increasing your position per stock?

    Cheers!

    • Don on March 18, 2014 at 6:28 pm

      I would just point out that you can’t really put US stocks in a TFSA because the US doesn’t recognize the tax-free status.

      • Bernie on March 18, 2014 at 11:52 pm

        @Don-
        I wouldn’t put U.S. dividend stocks in a TFSA due to the withholding taxes on distributions. But non-dividend U.S. stocks like BRK.B or GOOG would be ok…no taxes to worry about.

  10. My Own Advisor on March 19, 2014 at 5:52 pm

    Great CDN portfolio, we have some of the same holdings, but not surprised, as those ones increase their dividends steadily. 🙂

    As for the home country bias, I too am surprised you don’t have more U.S. content in your RRSP – any reason Robb? Could be another post entirely for that. You’re welcome for the content 🙂

    Kidding aside, most of my RRSP is U.S. stocks and one U.S. ETF, the non-registered is all CDN and the TFSA is 100% CDN as well.

    Really impressive you took out a loan that big and paid it back so quickly. Very well done!!!

    Mark

  11. Kakou on January 11, 2015 at 9:42 am

    Thanks guys for this article. The comments also are great. I am new to the the invetment world and I learn a lot from you guys.

    I consider starting a 5K portfolio what would be your best advises to me guys?

    Thanks

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