Best RRSP Investments in Canada

What the RRSP rewards

The RRSP shines when you contribute in higher-earning years and withdraw in lower-income retirement years, capturing the difference in tax rates. Investments inside grow tax-deferred — no annual tax on dividends, interest or gains.

Because it is a retirement account, the RRSP usually holds a long time horizon, which suits growth-oriented, diversified investments.

One important structural feature: under the Canada–US tax treaty, US dividends paid to an RRSP are generally exempt from the 15% US withholding tax when you hold the US security directly. This makes the RRSP a natural home for US equity exposure.

Asset types that commonly fit an RRSP

• Broad global or US equity ETFs: low-cost index funds that capture wide market growth over decades.
• All-in-one asset allocation ETFs: a single diversified stock/bond fund at a set risk level, automatically rebalanced — simple and hard to mismanage.
• US-listed dividend and equity ETFs: the RRSP's withholding-tax exemption makes it efficient for direct US holdings.
• Bonds and bond ETFs: as retirement approaches, many investors add fixed income to reduce volatility.

How to evaluate an RRSP holding

Use the same discipline you would anywhere, tilted toward the long horizon:

• Keep costs low — fees compound against you over decades, so favour low-MER index funds.
• Diversify broadly across countries and sectors rather than betting on a few names.
• Set a stock/bond mix that matches how far you are from retirement and how much volatility you can tolerate.
• Automate contributions to smooth out market timing and build the habit.

The US-dividend advantage in practice

Many Canadians deliberately place US-listed equity ETFs in the RRSP to benefit from the withholding-tax exemption, while keeping Canadian dividend payers and growth holdings in the TFSA. This is a refinement, not a requirement.

The exemption applies to US securities held directly — a Canadian-listed ETF that holds US stocks, or a Canadian ETF that holds a US ETF, may not fully capture it. If this level of optimization matters to you, read the fund's documentation or ask the issuer.

For most people, holding a single globally diversified fund in the RRSP is entirely reasonable and far better than not investing at all.

Putting it together

A straightforward RRSP plan for a long-term investor is one broadly diversified ETF — a total global equity fund or an all-in-one fund matched to your risk — with contributions automated each pay period.

As retirement nears, gradually shifting toward more fixed income reduces the risk of a large drop just before you need the money.

Remember that RRSP withdrawals are taxable as income, and the Home Buyers' Plan and Lifelong Learning Plan let you borrow from your RRSP for specific purposes with repayment rules.

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