Feb. 18, 2009 Under the mattress? In the freezer? In the cookie jar? Canadian investors report they are anxious about finances, but stashing money in different places throughout the house is never the best investment strategy, according to TD Waterhouse. Here are recommendations on how to invest this year from Patricia Lovett-Reid, the companys senior vice-president.

Although the eighth annual TD Waterhouse RSP Poll showed that only two per cent of Canadian investors have considered keeping their money under the mattress, many respondents have lost confidence in their ability to manage their own investments over the past year, with 24 per cent of investors agreeing with that statement in 2008 versus nine per cent in 2007.

With 2008 being one of the most stressful trading years in history, we know that investors have more financial worries than ever, says Lovett-Reid. People shouldnt let market volatility dictate their long-term financial planning and they should speak with an advisor who can help keep their retirement plan on track.

When it comes to how Canadians are feeling, approximately one half admit to having enough anxiety about their finances to keep them up at night (at least occasionally) and nearly 90 per cent of investors acknowledge having at least some financial worries. Topping the list of financial worries is their declining value of investments (22 per cent) followed by paying bills and managing day-to-day expenses (19 per cent), and saving money for retirement (14 per cent).

I encourage people to try and find a happy medium with their spending habits. Dont save until it hurts but dont spend like there is no tomorrow, says Lovett-Reid. Even when times are tough, there are ways to ensure that you are empowered and in control of your financial future.

One way that people can take control of their financial future is to maximize their RRSP contribution. Contributing the maximum amount possible into an RRSP may significantly reduce an individuals income tax payment for that year. Also, inside the RRSP, the investment has the potential to enjoy tax deferred growth over the years. Lovett-Reid suggests that investors short of funds could consider borrowing money to contribute to their RRSP and then paying down the loan with their tax refund.

Canadians tempted to keep money under the mattress, are neglecting the long-term impact of inflation on their purchasing power. For example, 10 years from now $1,000 will only be worth $820 at a 2 per cent average annual rate of inflation. Investors with longer time horizons should consider focusing more on long-term investment return potential rather than short-term volatility risk. Working with an advisor to set the right asset allocation for a portfolio can optimize its potential returns without exposing it to inappropriate levels of market risk.

The TD survey showed that women (54 per cent) are more frequently kept up at night by financial worries than men (41 per cent). Women are more likely to worry about meeting and managing day-to-day expenses than men (24 per cent versus 14 per cent). Men, on the other hand, are slightly more likely than women to worry about the declining value of their investments (23 per cent versus 21 per cent). Forty per cent of Canadians aged 65 to 69 are kept up at night by financial worries, compared to 51 per cent of people aged 35 to 49. People 50 years of age and older are more concerned with the declining value of their investments (34 per cent) than those aged 18 to 49 (11 per cent).

What Canadian investors have done due to the recent financial downturn is alter their spending and investing habits (49 per cent). The most cited spending and investment behaviour changes include postponing major purchases such as a house, car or furniture (52 per cent), charging less on credit (45 per cent) and still making non-essential purchases but spending less on them (39 per cent). Nearly an equal number of Canadians (38 per cent) are completely cutting out spending on non-essential purchases.

Women have changed their spending behaviour more than men. Nearly 50 per cent of women have completely cut out spending on non-essential purchases, whereas only 29 per cent of men have made the same decision. Older investors are more likely to have switched to less risky investments like GICs (36 per cent of 65 to 69 year olds versus 16 per cent of 35 to 49 year olds).

The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Financial Group. TD Bank Financial Group is the sixth largest bank in North America by branches and serves approximately 17 million customers in key financial centres around the globe.