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When should an investor consider opening a self-directed RRSP?

RRSPs, whether ordinary or self-directed, are an umbrella to hold your retirement investments. You receive a tax deduction when you make the contribution, and the growth of that money is sheltered from taxes as long as the money stays inside the plan.

A self-directed RRSP might suit you if you want to actively manage your retirement savings and are willing to take more risk than investing in mutual funds or guaranteed products like GICs. These plans are usually set up through an investment dealer, a bank or a trust company. Self-directed plans are aimed at investors who are comfortable making their own decisions on what individual stocks or bonds to buy and sell. When you make those trades, regular commissions are charged. You will probably face an annual administration fee, particularly if you have less than a certain minimum amount to invest. Fees vary widely -- and so does the method for determining them. Some institutions charge an annual administration fee, but waive that charge if you keep a minimum balance of $25,000 in your self-directed plan. Others charge a yearly fee of $125 and require you to have at least $15,000 to open a self-directed account. But these fees will often be reduced or eliminated if you negotiate, particularly if you have a large sum to invest. There may be restrictions on the specific types of investments you can hold in your self-directed plan, so check the rules when you shop around. Make sure you will be able to buy the full range of investments you want. For example, if you want to invest in strip bonds or mortgage-backed securities, you usually need a self-directed RRSP to do that. You can also hold the bonds of certain foreign governments and company shares listed on selected foreign stock exchanges. Consider seeking professional advice before making investment decisions.