- In the wake of rising inflation, it can be better to save and invest now than to defer it
- RRSP brings multiple pluses, of which tax exemption often attracts investors
- RRSPs can have stocks, and the two gold miners mentioned below can be considered
Investing a surplus amount can often a better choice than rashly spending. Macroeconomic indicators of the Canadian economy are currently a little subdued, with inflation pinching the most and the Bank of Canada looking to raise the policy rate to tackle unabated price rise.
In the light of these developments, it seems essential that Canadians can review their investment strategy to pave way for a stable and financially healthier future.
The Registered Retirement Savings Plan, popularly dubbed RRSP, can be a preferred choice when you want to build up a healthy corpus for the older version of yourself. Though other choices like Tax-Free Savings Account (TFSA) are also popular, RRSP comes with its own unique set of advantages.
What is RRSP?
It is a savings account that can hold qualified investments like stocks listed on any designated exchange, and Guaranteed Investment Certificate (GIC). The former are variable return assets, while the latter are for fixed returns.
The primary advantage that comes with an RRSP is the amount that you contribute is exempt from tax. This also means that your funds can grow without any tax implications as far as they are not withdrawn.
RRSP can be safely opted because it is a Federal Government registered plan, which is offered by banking institutions, insurance entities besides others.
Lastly, for the current year, maximum dollar limit for RRSP is C$29,210, which defeats the contribution limit of a TSFA account, C$6,000, by a huge margin.
That said, let us now take a quick look at two TSX Venture-listed stocks, which you can hold in the RRSP account.
Osisko Development Corp. (TSXV: ODV)
With its Cariboo and Bonanza Ledge II (BC) and San Antonio (Mexico) projects, the company holds gold mining interests at multiple locations for exploration and development of the precious metal.
The financial results of the company included a net loss of over C$133 million for the year ended 2021, which was more than the net loss of over C$8 million for the year ended 2020. Its comprehensive loss for the year 2021 was over C$149 million.
Osisko Development Corp, trading under ticker ODV, does not pay dividend.
2. Arizona Metals Corp. (TSXV: AMC)
Another gold miner listed on TSX Venture, Arizona Metals’ projects include Sugarloaf peak gold, and Kay mine. The company is also into copper exploration.
In October 2021, the company announced bought deal financing, which included the lead underwriters -- Stifel GMP, and Clarus Securities Inc. -- purchasing 10.6 million common shares of Arizona Metals for a price of C$4.25 per share.
Trading under ticker AMC, Arizona Metals does not pay dividend.
RRSP is a great option as it comes with the Federal Government backing. The benefit of tax exemption is a great lure and RRSP can help you build a good retirement corpus. As RRSPs can hold TSXV shares, the above two gold mining stocks can be considered for the long-term.