There’s been lots of discussion lately about the best options for how and where to invest your money for retirement. With the advent of artificial intelligence (AI), some people are even choosing to let automated financial advisors (or “robo advisors”) make these decisions for them.
These are extremely important decisions – especially for the nearly half of Canadians who don’t have enough money saved for a comfortable retirement.
At Saskatchewan Pension Plan (SPP), we believe you should enjoy your life now and in retirement. Part of this means providing you with sound information so you can make the best decisions for your life, family and goals.
This edition of our newsletter focuses on two areas that are crucial when deciding who to trust with investing your retirement savings.
PROFESSIONAL OR DIY: WHICH INVESTMENT STRATEGY IS RIGHT FOR YOU?When it comes to investing your money, you typically have two approaches to choose from: make and execute your own decisions for your investment accounts (self-directed) or entrust someone else to do it for you (managed).
There are, of course, pros and cons to each approach.
Self-Directed
Self-directed investing places you in complete control of all aspects of your investments – for better or worse.
Pros
- No fund management fee
- You decide which stocks, bonds or mutual funds to invest in, how much and when
- Control how much risk you take on
Cons
- Requires strong investment and financial knowledge, including understanding of the stock markets and associated risks
- Takes time each month to research, track and manage/update investments
- Lack of professional advice and support
Managed
Managed investing takes advantage of the expertise of industry professionals to manage your investments for you. This typically comes in the form of trained advisors or planners.
Pros
- Peace of mind knowing your money is being managed by an expert
- Professional guidance for fund selection based on goals and risk tolerance
- Save time and effort – your advisor takes care of everything for you
Cons
- Advisors charge an account management fee, which can cut into your savings
- Reduced transparency/control over where your money is invested
- Performance can be impacted by the advisor’s skill/experience level
Decide which method is right for you, as both have pros and cons.
Robo-advisors
Another, more recent form of managed investing utilizes computer algorithms and AI to automate investing with little to no human intervention. While fees are often low, the lack of control and personalization after setup means your investments don’t adapt to your evolving goals or situation.
WHERE DOES SPP FIT IN?
SPP occupies a unique position in the investment landscape. As a pension plan composed of professionally managed funds, you benefit from the performance and peace-of-mind that expert fund management provides. Unlike most typical managed investments, however, SPP is committed to keeping management fees as low as possible (typically less than 1%), ensuring more of your hard earned money goes toward building your retirement.
Fund Management
SPP’s funds are professionally managed by some of the most well-known Canadian investment firms, including TD Asset Management, with the proven qualifications, expertise and experience to provide you with a diversified mix of both growth and security. (View more details here.)
Flexibility
Like any RRSP, you have the option to transfer money from non-locked-in investments into your SPP at any time, or adjust your regular contribution payment plans and schedules (with available RRSP room). Simply contact one of our representatives to adapt your plan to your changing needs and goals. We’re only a phone call or email away.
Performance
Consistent, long-term performance is the hallmark of a sound investment. SPP has delivered a rate of return of 8%* to members since its inception, and because of our low overhead, our management expense ratio remains low (typically under 1%), helping SPP members retire up to 35% wealthier!**
Investment Options
We offer two investment options: a Balanced Fund (focused on steady growth and security), and a Diversified Income Fund (focused on reduced equity exposure).
As an SPP member, you enjoy the perfect blend of flexibility, reliability, performance and customer service. It’s a great way to enjoy the benefits of low fee managed investing while still being able to talk to helpful local SPP member service representatives.
*Average rate of return net of fees. Past performance does not guarantee future results.**Compared to paying 2% MER over 45 years.
Reach your goals faster
Contact us to learn more about how your contributions are invested and ways you can maximize your savings to reach your retirement goals faster.