RRSP Investors: How to Build Wealth for Decades
Canadian savers are using their self-directed Registered Retirement Savings Plan (RRSP) contributions to create wealth portfolios that will complement government and company pensions in retirement.
One popular RRSP investing strategy involves buying top TSX dividend stocks and using the distributions to acquire more shares.
Power of compounding
Many companies offer a dividend-reinvestment plan (DRIP) that enables shareholders to automatically use dividend payments to buy more shares. Some DRIPs even give a discount of 2% to 5% on the share price to encourage shareholders to buy more stock. This keeps more cash in the business to be used for investments or to pay down debt.
Buying stock with dividends kicks off a compounding process…
