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How registered retirement savings plans (RRSPs) will be affected decades from now by an escalating global military buildup or higher interest rates are probably the last things investors are thinking about as they rush to make a contribution before the March 1 deadline.

But beyond that tax refund in the spring, the long-term investments inside RRSPs ultimately determine how people live in retirement.

Unlike non-registered investment accounts or tax-free savings accounts (TFSAs), the ability to defer taxation to retirement through an RRSP provides an incentive to invest over several decades.

That means choosing the right mix of investments that grow over time is paramount. Globe Advisor spoke with three veteran money managers about their best long-haul RRSP investment picks.

Diana Avigdor, head of trading, Barometer Capital Management Inc. in Toronto

Hikes in interest rates of 425 basis points since early last year is a game-changer for money managers like Ms. Avigdor because clients now have the option of shifting assets into bonds and other fixed income with safe and worthwhile yields that can compound over time.

However, she cautions that real returns could be stemmed by inflation and likes investment-grade corporate bonds for higher yields with a lower level of risk for younger investors. She points to iShares iBoxx $ High Yield Corporate Bond ETF HYG-A as an option to diversify risk.

“What COVID-19 has created is a situation in which [corporate] savings and balance sheets are pretty healthy, unlike in 2008, when they were levered and there was a crisis,” she says.

On the equity side of a portfolio, she prefers a split between passive and active management. Her passive pick – nicknamed “spider” – is SPDR S&P 500 ETF Trust SPY-A, the benchmark for global stocks.

“You could just leave [a spider] in your RRSP for 20 or 30 years,” she says. “When you look at the law of averages, it’s on your side. There’s never been a 20-year return in the S&P 500 that was negative.”

Ms. Avigdor stresses the importance of an actively managed component – even if that means paying management fees either directly to an advisor or through a mutual fund.

“Your return is 80 per cent determined by sector allocation,” she says.

One specific long-haul stock she likes for RRSPs is global defence manufacturer Lockheed Martin Corp. LMT-N. She expects the company to lead the sector as the world moves away from globalization toward sovereign independence.

“Defence budgets have grown and are growing, and I expect them to stay stable relative to [gross domestic product] and not go down over the next two decades as we move away from globalization,” she says.

“The world is dangerous, and these guys have long-term contracts.”

John Zechner, chairman and lead equity manager, J. Zechner & Associates Inc. in Toronto

On a similar geopolitical theme, Mr. Zechner points to the global semiconductor supply crunch during the pandemic and China’s recent acts of aggression toward Taiwan – home to the world’s largest producer, Taiwan Semiconductor Manufacturing Co. Ltd. TSM-N.

To avoid one-company risk, he likes VanEck Semiconductor ETF SMH-Q, which also holds Nvidia Corp. NVDA-Q, Broadcom Inc. AVGO-Q, and Texas Instruments Inc. TXN-Q.

“Semi[conductor]s are the new industrial growth engine. You want to have your finger in there even though it’s a little cyclical,” he says, adding that buying the entire semiconductor market-weighted index is a great way to ensure holding the dominant players.

“It rebalances automatically to market weight, so you don’t get stuck with a dog like Intel that used to be the second- or third-biggest holding.”

Mr. Zechner says the same strategy for investing in the sector-leading companies of tomorrow can apply to other subsectors including biotechnology through iShares Biotechnology ETF IBB-Q or SPDR S&P Biotech ETF XBI-A.

“You don’t have to buy them actively. They will find their way in because it’s part of the index,” he says.

Another long-haul RRSP investment that tops Mr. Zechner’s list is a staple in most Canadian retirement portfolios – the big Canadian banks.

They earned their chops as profitable beacons of stability during the 2008 global financial crisis, have consistently risen in value over time, and have never reduced a dividend payout since Confederation.

Mr. Zechner likes Bank of Montreal BMO-T, Canadian Imperial Bank of Commerce CM-T and Bank of Nova Scotia BNS-T but says the best bangs-for-the-buck right now are Toronto-Dominion Bank TD-T and Royal Bank of Canada RY-T.

“They have the least risk in terms of their overall portfolio and size, have more U.S. growth, and the valuation multiples have compressed,” he says.

Allan Small, senior investment advisor, Allan Small Financial Group, iA Private Wealth, in Toronto

You would be hard-pressed to find a Canadian money manager who doesn’t like the big Canadian banks for the long haul. Mr. Small goes further by adding big global banks to the mix for diversification.

“If you want to own something for the next 20 years, you can own a couple of Canadian banks mixed in with a couple of U.S. banks,” he says.

“If you’re looking more at yield, growth and income, you go with the big Canadian banks. If you want more growth, you go with big U.S. banks like Bank of America Corp., Wells Fargo & Co. or Citibank NA.”

Mr. Small also sees long-term bargains in large technology stocks, which lost more than one-quarter of their market value last year as interest rates increased.

“Big-cap tech today makes sense because of the selloff we experienced in 2022,” he says. “A lot of big cap names are on sale for half their value such as Amazon.com Inc. AMZN-Q, Alphabet Inc. GOOGL-Q, or Microsoft Corp. MSFT-Q.”

Mr. Small’s final long-haul RRSP investment is more of a strategy shift for mature portfolios that might have outgrown mutual funds and their sometimes hefty fees.

“If you have a large enough portfolio in which you can build your own mutual fund out of individual stocks, pay your advisor a flat fee for managing the portfolio,” he says.

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