That's not smart, and the example of 1998 shows why. Back then, the Toronto Stock Exchange 300 composite index was stuck in a nasty slump that resulted in large part from a rotten environment for resource stocks. At the end of the year, the index was down 1.6 per cent.

If your RRSP equity holdings were tied up in Canadian equity funds that year, you'd have done well to tread water.

If you had some global diversification, though, you were almost guaranteed to have had a decent year.

While 1998 was painful for the TSE, global markets were on fire. The S&P 500 stock index jumped 37.6 per cent in Canadian dollar terms, while the Morgan Stanley Capital International (MSCI) World Index gained 33.5 per cent.

Spreading your money among stocks, bonds and cash is of paramount importance in investing, but diversifying globally is right behind. Problem is, Canadians aren't getting the message.

In the RBC poll, the average foreign content level for the 1,200 participants was 9.9 per cent.

Thirty-five per cent said they had no foreign content, while 88 per cent said they were under 25 per cent.

Companies in the financial industry love to issue polls during RRSP season because they're an easy way to get media attention. Often, these polls produce nothing more than facile conclusions drawn from conversations with a thousand or so people who were interrupted at dinner.

There's a dollars-and-cents argument for paying attention to the RBC poll, however. If you don't have some exposure to global markets in your RRSP, then you're accumulating less than your fair share in retirement savings.

Let's consider the example of an investor who has 40 per cent of her RRSP in bonds and cash and 60 per cent in stocks. Using an on-line calculator available on a Web site called http://www.RetirementAdvisor.ca , it's possible to compare two different ways of investing the equity portion of this portfolio.

Imagine, to start, that the 60 per cent is invested in Canadian stocks. Based on historical returns, the entire portfolio could be expected to make 10.3 per cent a year.

Now we'll invest 20 per cent of the equity holdings in Canadian stocks, 20 per cent in U.S. stocks and 10 per cent in international stocks. This mix produces annual gains of 11.1 per cent.

Don't imagine that this is a trivial difference. If you invested $25,000 for 20 years at 10.3 per cent you'd have $177,602.98; at 11.1 per cent you'd have $205,220.71, or $27,617.73 more.

Your monthly RRSP account statement should tell you the percentage of foreign content in your account. Remember, the percentage applies to the book value of your holdings, not the market value of the portfolio. Book value is described as purchase price, plus any of the sort of distributions that mutual funds commonly pass on to unitholders.

The easiest way to add foreign content is to buy a U.S. or global equity fund -- start with the former, then add the latter. You can also hold global exchange-traded funds and stocks, of course.

As for the 30-per-cent maximum for foreign content, many people would do well to consider it a minimum.

There's a wide selection of global mutual funds and exchange-traded funds that offer foreign exposure but are classified as domestic content for registered retirement plans. These funds hold most of their assets in Government of Canada treasury bills while using futures contracts to track the performance of global stocks or stock indexes. If this sounds strange or dangerous, it's not.

With a little more foreign content, you stand to reap higher returns. RetirementAdvisor.ca shows that a mix of 40-per-cent bonds and cash with 20-per-cent Canadian equities, 30-per-cent U.S. equities and 10-per-cent global equities would give you annual returns averaging 11.6 per cent, based on historical numbers. That's half a point better than if you kept to the 30-per-cent limit as per the example mentioned earlier.

It has to be noted that the past year hasn't been a great advertisement for global diversification. While the TSE 300 fell 13.9 per cent, the S&P 500 was off 6.5 per cent in Canadian dollar terms, and the MSCI World Index fell 11.5 per cent.

If you want protection from bear markets, buy bonds or money market funds. If you want to wring every last bit of juice out of the equity holdings in your RRSP, invest globally.
rcarrick@globeandmail.ca