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Author: tecmo Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 1193  
Subject: Re: Fed up with 20% FC in RRSP? Date: 11/9/1999 11:28 AM
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Yves, I will play devils advocate here.

Why should the you be allowed to invest more than 20% outside of Canada? Nobody is forcing you to invest inside your RRSP? Investing in Canadian companies helps the Canadian economy and we all benefit. RRSP are a way for the government to encourage investment in Canada.

Suppose the government wanted to encourage investment in farming and such created a FIRP (Farming Investment Retirement Porfolio) and the rules were that you had to invest 90% of the money in Canadian Farms, as an incentive the goverment guaranteed your initial investment. Now does it make sense to argue that the goverment is restricting your investing options by limiting you to farms? Of course not! Governments try to direct capital all of the time, RRSPs are just one way of doing that. If you don't like the rules then don't play the game.

Imagine how much harder it would be for canadian companies to raise captial if there no RRSP restriction? The TSE would probably fall by 30% or more as people rushed to move their investment dollars. When you put your money into the RRSP you knew the restriction was there, don't try to change the rules after the fact!

What the government should really do, is make canadian companies more competive so that investing in them can be more profitable. I think that high taxes are the number one problem facing canadian companies (esp High Tech).

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