free money? no thanks

I think I've mentioned before that I participate in my company's defined contribution pension plan. The way the plan works is outlined below:

My Company

• 2% of my salary regardless of my contribution
• 4% of my salary matched to my contribution

What this means is that even if I didn't contribute anything to my Registered Retirement Savings Plan (RRSP) my company would kick in 2% of my salary. My company will also match the contributions that I do make up to 4% of my salary.

For example if I decide to contribute 5% of my salary into my RRSP out of my own pocket, my company will then contribute 2% (automatically), and 4% to match me. Therefore I'll end up with a contribution of 11% of my salary. Since my company is kicking in 6% out of this 11%, I am essentially starting out of the gate with an investment return of a whopping 120%

A recent survey by Sun Life Financial found that 1 in 5 people who have access to this type of program don't participate. About 40% of employed Canadians have access to this type of program, but only 80% participate. What that means essentially is that 1 in 5 people are saying 'no' to free money. Reasons for this varied from no desire to, to no money to spare, but the weirdest reason was the following "they preferred to invest on their own". I would be interested to know what these folks were investing in on their own that was worth passing up a guaranteed return of 25% to 150%, before the money is even invested.

registered portfolio update

Thus far, the moneygardener has not included much information about my registered investment portfolio. Like many other Canadians, I participate in a defined contribution pension plan through my employer.

The Plan

Here are the details of the program:

Employer contributes 2% of my annual base salary to the plan. Employer then matches my contributions to the plan, up to 4% of my annual base salary.

For example:

If I contribute 5% of my salary out of my own pocket, my employer contributes 2% (automatically), and a further 4% to match my contributions. This means the total amount contributed to my RRSP would be 11% of my annual salary.

The Portfolio

My basic strategy for my RRSP portfolio right now while I am relatively young is to aim for high growth, keep it simple, and minimize fees.

Here is how the portfolio breaks down:

PH&N Canadian Equity Segregated Fund = 34%

BGI U.S. Equity Index Segregated Fund = 41%

Templeton International Stock Segregated Fund = 25%

The MERs for these funds are 0.29%, 0.22%, and 1.12% respectively. Currently I am contributing 1/3 of incoming capital to each of these three funds.

Here is the actual breakdown of exposure within the portfolio.

Some of the largest individual stock weightings within this portfolio currently are:

Exxon Mobil

General Electric

Manulife Financial

Suncor Energy

Siemens

Vodafone Group