Canadians are tired of seeing the value of their portfolios fluctuate wildly, and so they’re seeking out safe-haven investments for their RRSPs this year, according to a recent survey by Bank of Montreal.
In the survey of 1,500 Canadians, 55% said they are worried about more market turmoil in 2012. As a result, the majority of respondents are unsure of where to invest their savings in the next year.
Many plan to bulk up their fixed income holdings as the market uncertainty continues. Seven in 10 respondents said they believe it’s important to have fixed income investments as part of their portfolio to protect against market volatility.
“The instability in the markets over the last year has investors seeking options that are stable and can see them through periods of uncertainty,” said Domenic Gallippi, head of term investment products at Bank of Montreal. “One of the most effective ways of insulating financial portfolios against market volatility is by incorporating fixed income investments, such as bonds or Guaranteed Investment Certificates.”
On average, Canadians hold roughly one-third of the value of their investment portfolios in GICs, and another fifth of their portfolios is comprised of bonds.
As clients add to these weightings this RRSP season, Gallippi suggests that advisors steer them towards growth-bearing fixed income investments.
“There are many safe investment options out there, such as GICs or market-linked GICs, that investors can leverage to shelter and grow their savings while protecting their principal,” he said.
Clients have until Feb. 29 to make RRSP contributions for the 2011 tax year.