Average investors in B.C. have been returning to the stock market this RRSP season.
Mark Breakspear, investment sales manager at BMO Bank of Montreal, noted yesterday that investments in long-term equity mutual funds into client RRSPs in Vancouver are up 16% compared with last year, reflecting stronger investor confidence in the market.
Those results extend positive investment inflows across the country last month. According to the Investment Funds Institute of Canada, total mutual fund assets in Canada rose to $641.8 billion in January, up $6.1 billion from December and $85.4 billion from January 2010. Both long-term equity funds and balanced funds saw net inflows of investor funds.
While a recent BMO survey found that western Canadian investors in B.C. and Alberta are fairly confident about their ability to save for their retirement, Doug Porter, BMO’s deputy chief economist, said Canadians need to save more than they have been in order to secure enough funds for their retirement.
On average, Canadians have been saving about 4% of their annual income, but that is likely far less in B.C.
“If you believe our view that a balanced portfolio will return 5% to 6% over the next 10 years, it requires a personal savings rate of around 10% each year to build up a nest egg to replace about 35% of your pre-retirement income.”