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.
Related: RRSP 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.
