Stephen Cragg

Financial Security Advisor
Investment Representative
Group Benefits Broker
Freedom 55 Financial

RRSPs and TFSAs - made simple

Your decision to start saving money may not only help you achieve your goals, it can help create healthy financial habits that last a lifetime. The sooner you start contributing to an RRSP or TFSA, the greater the growth potential.

The first step to saving is deciding where to invest your money. Registered retirement savings plans (RRSPs) and tax-free savings accounts (TFSAs) are great options. They’re both individual savings vehicles registered with the Government of Canada that allow you to save for the future on a tax advantaged basis. What works best for your unique situation depends on a number of factors, such as your age, income, marginal tax rate and future cash flow needs.

TFSAs and RRSPs both offer tax advantages to help you reach your savings goals. If you can afford it, a good strategy is to contribute as much as you can to both. But if you have to choose one over the other, make sure you understand how they differ. And then make your choice based on your own individual financial and tax situation.

What’s better - RRSPs and TFSAs ?

There’s no hard and fast rule as to which type of savings account is better, but there are a few key factors to consider when making a decision. In general, both RRSPs and TFSAs are good choices for long-term savings goals. However, if you know you’ll need to withdraw money in the near future, a TFSA would be better suited to meet short-term objectives. If you have money available to maximize contributions to both account types, this generally makes more sense than putting money into a non-registered account. If you must decide between one or the other, you should consider whether your total annual income is likely to increase or decrease over time. If you expect your income to increase, it may be a good strategy to contribute to a TFSA now, when you’re paying less income tax. Contributing to an RRSP later, when you’re earning a higher income may give you a bigger upfront tax receipt at that time.

As your financial security advisor and investment representative I will work closely with you to help determine an approach that best suits your current and desired situation and future goals.

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