Valle: RRSPs aren't the best place to make risky bets on AI
I’m 54, have lots of RRSP contribution room and I read a lot of interesting things about artificial intelligence. How can I best invest in AI with my RRSP?
Nobody wants to miss the next big thing.
And artificial intelligence feels unavoidable. From customer service chatbots to medical imaging, the technology is changing how businesses operate. So it’s natural to wonder whether your retirement savings should be part of that story.
But before deciding where to invest your money, it’s worth remembering what an RRSP is for.
An RRSP is not just a tax shelter. It is a limited tax shelter. Each year, Ottawa gives you a finite amount of contribution room. The deadline this year for making an RRSP contribution is March 2.
History offers useful warnings about taking investing risks on technology. In the mid-19th century, railways transformed transportation across Europe and North America. Investors rushed in, convinced they were backing the future. Many were right about the technology — railways endured — but disastrously wrong about individual companies.
We saw a similar dynamic during the dot-com boom. For example, Montreal was home to dozens of tech startups in the late 1990s, many of them trading publicly despite limited revenues. When the bubble burst, companies disappeared, but the internet did not. The technology survived; much of the invested capital did not.
Artificial intelligence may follow the same pattern. Established firms and ambitious newcomers are competing for investor attention, often through AI-themed mutual funds and ETFs now widely available to Canadian RRSP holders. The promise is simple: Don’t miss the next Microsoft or Apple.
This is where risk and reward matter — especially inside an RRSP.
If an investment inside your RRSP goes to zero, that contribution room is gone forever.
So if you invest $10,000 of RRSP room in a narrowly focused AI fund and it collapses, you don’t just lose money — you permanently lose the ability to shelter that $10,000 again.
The odds are not in your favour. While artificial intelligence as a technology is likely to grow, identifying the small number of companies that will dominate in 10 or 20 years is extremely difficult. Investors learned this lesson with Nortel, once a cornerstone of Canadian innovation and a staple in retirement portfolios — until it wasn’t.
Avoiding speculation does not mean avoiding AI altogether.
Broadly diversified mutual funds and ETFs already include exposure to artificial intelligence through large global companies that develop chips, software and cloud infrastructure. The six largest companies directly involved in AI make up over 31 per cent of the S&P 500’s total market valuation. In 2025,
Sequoia Capital’s David Cahn estimated AI-related capital spending reached $600 billion
, even though only $35 billion in new revenue was realized in the same year. This means that for every dollar spent, a return of about six cents was made.
That gap matters. If expectations fall faster than revenues rise, investors may feel the impact — especially during a recession.
Single-country indexes like the S&P 500 are also concentrated in a small number of very large, very expensive companies. Today, about seven firms dominate the index. Many Canadian investors are unaware of just how narrow their exposure has become.
There are alternatives. Funds that invest across multiple global indexes — spanning different countries, currencies and sectors — reduce the risk that any one theme, technology or market downturn will derail your retirement plan.
Harry Markowitz, whose work on portfolio theory earned a Nobel Prize, summarized it neatly: Diversification is the only free lunch in finance.
Chasing higher returns through concentrated AI investments may feel exciting, especially when headlines are glowing. But RRSPs are not venture-capital accounts. They are the foundation of future income.
A globally diversified, low-cost fund may look dull on paper. In retirement, dull often turns out to be exactly what you want.