Question about RRSP's?

Is it better to invest in a portfolio-type investment, such as the BMO Matchmaker portfolios, or in individual stocks, such as the BMO Equity Fund? I was looking at the performance of individual stocks vs. pre-fabricated portfolios on BMO's website and it looks like the portfolios don't do as well as some of the individual stocks.

Also, can you get a pretty good idea of a particular stock's performance simply by looking at the "since inception" performance figure?

I'm pretty new to this stuff. :)

I am 29. This is my first time investing in an RRSP. I thought I understood the basics of the stock market but the more I research this, the more I realize how completely ignorant I actually am!

Past performance is NO GUARANTEE. In fact, some of the best performing funds will be the worst performing the next year.

What you should be looking at is the lowest possible fees while getting the best possible diversification. Index funds are good for that. Fees in Canada are highest in the developped world. A fund that performs at 8% but has a 3% fee will do worse for you in the long run than a fund that performs at 6% but has a 1% fee.

Check out this article on getting the most out of your RRSP:
http://www.canadiancapitalist.com/2008/0...

And contrary to what the banks and the investment advisors say, actively managed funds almost all do worse, in the long run, than an index of the entire stock market
http://www.canadiancapitalist.com/2007/1...

Good choices for low fee funds in Canada:
ING's streetwise funds
TD's e-series Mutual Index funds

As for a portfolio fund vs a mutual fund: The idea behind a portfolio fund is that it puts some stocks and some bonds together for you. You can do that yourself by getting a good stock index fund and a bond index fund.

The younger you are, the more of your portfolio should be in stocks. THis is because stocks are more volatile. If you are young, you have time to ride the dips out. If you are close to retirement, you don't. If you are 25, you can be all in stocks. If you are 60, it should be mostly in bonds.

This is an an awesome answer. Thanks! Report It

Portfolio is better

"It looks like the portfolios don;t do as well as some of the individual stocks" Now, looking at what you said, do you see the logical flaw? It's in the word 'some'.

If you have a crystal ball handy, and can predict which stocks will do well, which will fail, then go ahead an pick them. But since you don't, and assuming you don;t have the time to pick and choose the best, then you basically 'hire' someone to do that picking for you, and you do that by buying a fund.