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Discussion Starter #1
Does anyone have a suggestion for how asset allocation should be managed across a husband and wife's RRSP?

For example, is it best to:

1. Have each RRSP portfolio maintain the allocation I've decided on (e.g. X% bonds, Y% equities)

or

2. Have 1 RRSP have the bonds component while the other has the equities component (potentially this could cut down on trading fees)

or something else? Opinions? Thanks,
jeff
 

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The right answer probably depends on your exact situation, including whether you have non registered savings accounts as well. If you do, then some suggest putting all your bond part (or even broader, your interest generating part) of of your overall portfolio in the RSP / TFSA accounts since you will not pay tax on interest you get from the bonds; interest income is taxed 100% at your marginal tax rate if it is outside a tax sheltered account. Then put the equities in the taxable accounts, since cap gains etc are not taxed so heavily.

If you do not have any non tax sheltered savings, then what to do really depends on what you are investing in: individual stocks, mutual funds, etfs; as well as how often you trade if it is ETFs or stocks, as well as what your plan is when it comes to withdrawing the funds from the RRSP accounts.

For example, if you are using low MER mutual funds then trading cost is not an issue, so why not have each account mirrored so when it is time to withdraw you each have the same amount to draw from.

If one of you will have other income even when you are going to take from RRSP, then maybe it makes sense to have that person more heavily in bonds and the other more in equities; assuming the equities end of generating a much larger return in the end than the bonds. ;)

Again, it probably all depends on the details of your situation.
 

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I can see no benefit from considering them separately. It is a heck of a lot simpler to lump them together. Personally I lump ALL my accounts together - regular and tax sheltered. But that is a personal decision.
 

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I can see no benefit from considering them separately. It is a heck of a lot simpler to lump them together. Personally I lump ALL my accounts together - regular and tax sheltered. But that is a personal decision.
I would disagree. If they are all one person's accounts OK. But these are RRSPs registered to separate persons. Leaving aside ssimps' observations about balancing registered & non-registered savings, I think the 2 RRSPs need to be treated separately because:
a) When they reach maturity they will need to be converted into separate annuities or RRIFs. They cannot be combined. If one has grown at a significantly different rate than the other, the resulting income streams will also be significantly different.
b) Perhaps I am reading too much into a word, but I am a little concerned about the statement "Have each RRSP portfolio maintain the allocation I've decided on (e.g. X% bonds, Y% equities)" The wife's RRSP is hers, and needs to have an asset allocation she is comfortable with (or they in consultation). If wife is not comfortable or knowledgeable about investing, it's time she learned - it's her money.

I must admit my argument kind of comes full circle though. If wife decides she is comfortable only with GIC's for example, husband might decide he can risk increasing his equity allocation in consequence.
 

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Worst case scenario - you seperate and one party is left holding 100% stocks right after a market crash.

I would maintain proper allocation in each account seperately.
 

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I believe in any separation the FMV of each spouse's assets (including RRSPs) would be calculated in arriving at any settlement. RRSP assets can be split on breakup of a marriage. So I don't think that scenario would make any difference. Other than to add fuel to the fire, as in "How could you have been such an idiot as to bet all my/your RRSP on Nortel?"
 

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Discussion Starter #7
Allocation across 2 rrsps

Thanks everyone for your replies and your good points. I did a bit more digging today and found that, in fact, this topic has come up before on this forum (http://canadianmoneyforum.com/archive/index.php/t-321.html).

In that discussion, an additional point that came up was that it might be advantageous to have both RRSPs have roughly equal value at the moment of retirement, so that the income stream for each spouse is roughly equal (to minimize taxation). However, one member noted that, at the moment, income splitting is allowed on pension income, so... if that continues to be the case, it wouldn't be necessary to equalize the two rrsps...

Having thought about it though, I think I'm going to create 2 mirrored portfolios. I accept OhGreatGuru's point that the assets would be considered comprehensively in the case of a divorce, but... the RRSPs will inevitably grow at different rates if I don't mirror, and despite the fact that my wife and I collaborate on investment strategy and feel that everything we have is "ours", I don't like the connotations carried by a strategy that lets the investments in one spouse's name appreciate more slowly - even if it's for the "greater good".

jeff
 

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We have 6 RRSP accounts. Not by choice. I have one, he has one, I have a spousal, we have LIRAs (provincial and federal) from previous employers. We consider all of our accounts (including the non-registered money) as one portfolio for AA purposes. It is easier for us not to have 'her money' and 'his money'. This way we figure out the AA for the entire portfolio and invest our new money and distributions accordingly.
 
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