What are RRSP’s and TFSA’s?



A TFSA can be an excellent way to save some money for the future, unfortunately a large portion of Canadians using TFSA’s do not know how to use them to maximize their return. Another scary statistic is that according to a CIBC survey that 41% of Canadians have no idea what they plan to do with their money.

A good strategy is to take a little bit of money from each payday and deposit it into your TFSA. This over the short term will allow you to advance your financial position. Your financial planning for your TFSA should be towards overall saving the most taxable money. For example, interest is taxed at the highest rate of any investment vehicle, but because interest rates are currently low, your largest tax saving could be with a vehicle that provides a higher amount of return but at a lower tax rate.


Consumers (myself included) look at everything from stocks, bonds and now the very popular tax free savings account. Though what is forgotten with all of these options is what seems to be becoming the lowly RRSP. The RRSP however represents a top way Canadian’s can save significantly on their taxes and for ‘the golden years’.

The benefits of an RRSP are present for everyone. For example a RRSP can save you up to $400 for every $1000 you contribute depending on your tax bracket. Any unused room in a RRSP can also be carried forward to future years, so that if you don’t invest as much this year you could invest the max amount plus the unused contribution room from the previous year(s) in the years to come.

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