With the 2022 registered retirement savings plan (RRSP) contribution deadline behind us, Canadians can now focus on the more difficult task of turning those contributions into investments.
In a rush to meet the deadline, many “parked” their contributions in cash but the time has come to make those contributions part of a strategy that will allow an RRSP to grow over several decades.
Investing in an RRSP is different from investing in a non-registered trading account or a tax-free savings account (TFSA) because contributions and all the returns they generate over time are fully taxed when they are withdrawn. That provides an incentive to hold investments to retirement, when the plan holder is usually taxed at a lower marginal rate.
RRSPs can invest in just about anything that trades on major markets, which provides an opportunity to create a diversified portfolio that can maximize growth and limit risk over time. 
A qualified advisor can help create the right mix but here are some examples of investments that are well suited for an RRSP.
A massive hike in interest rates in 2022 brings opportunity for RRSP investors in 2023. Investment grade bonds and other fixed income like guaranteed investment certificates (GICs) are now yielding over five per cent annually compared with less than one per cent a year ago.
That provides a greater incentive to reduce portfolio risk by shifting assets from equities to fixed income.
Fixed income is ideal in an RRSP because it has plenty of time to compound. 
Opportunities to get the best yields are more frequent if maturities are “laddered” over various periods of time.  
Most Canadians invest for retirement through mutual funds because it’s the only way for them to get diversification through professional investment managers.
There are thousands of mutual funds available on the market that span geographic and sector lines.
Many mutual funds outperform their benchmark indices over long periods of time but most don’t due to annual fees as high as three per cent. 
Exchange traded funds (ETFs) can provide a similar level of diversification for a sliver of the cost of mutual funds. 
Instead of having a manger choose the holdings, ETFs mimic the holdings in an underlying index such as the S&P 500 or S&P/TSX Composite. 
The most basic ETFs are market-weighted; meaning the weighting of any particular holding in an ETF fluctuates with its price at any given time.
As the value of a portfolio grows, investors can break free from annual fees and diversify by investing directly in stocks. The best stocks for an RRSP are those with long histories of growing earnings over time, strong fundamentals for future earnings, and paying consistent dividends.
For that reason, the big Canadian banks have become staples in RRSPs, along with the big telecommunications providers and many energy companies such as pipelines.
A reliable income stream is important as the time to withdraw cash nears. The best income sources are stock dividends and yields from bonds or other equities such as real estate investment trusts (REITs).
Considering Canadian equities account for less than three per cent of global equities, it is important to hold a significant portion of an RRSP outside Canada.
The S&P 500 trades out of the U.S. but is diversified on a global level. Most Canadian trading accounts have access to large U.S. companies but U.S. mutual funds or ETFs could be a better way to diversify.
Diversification also applies to currencies. Holding a significant portion of an RRSP in U.S. dollars comes in handy for retirees spending time outside Canada; especially when the loonie is flying low.
Canadian currency hedges on foreign investments can also be costly. Annual fees on Canadian-dollar hedged versions of U.S. funds can be half of a per cent higher than the unhedged version.
The Canadian dollar is currently trading at mid-range (74 cents to the U.S. dollar). It makes sense to convert this year’s RRSP contribution to greenbacks before investing, but it could make more sense if the loonie strengthens.