Planning for a Project or Retirement?

A solution tailored to your needs will help grow your savings and reach your goal.

RRSP

If you think you don’t have the money to invest in an RRSP, think again. A RRSP loan allows you to start investing or make further contributions to your existing RRSP. The earlier you invest, the closer you will be to a secure, promising retirement.

Interesting RRSP features: 

• Flexibility to decide how much you want to invest annually.
• Tax-sheltered investment earnings until withdrawal.
• Deposits made on an annual, monthly or other basis.
• Diversified Investing Options.
  

Here are the 10 main strategies for getting the most out of your RRSP:

1. Remember any unused contribution room you may have from previous years.
2. Balance your retirement income against that of your lower-income partner. Contribute to a Spousal RRSP in his or her name and benefit from the tax deduction.
3. Contribute regularly. Consider investing on a monthly or quarterly basis.
4. If you make a single annual contribution to your RRSP, do it earlier in the year. This gets your money working for you sooner and longer.
5. Borrow to contribute to your RRSP – this offers significant benefits. The gains from one year of tax-sheltered growth often exceed the cost of the loan.
6. Analyze your needs – your financial goals, risk tolerance and the number of years you need to contribute to accumulate the assets you want for retirement.
7. Diversify your portfolio. Stocks, bonds and liquid assets all react differently to market changes. Do not limit yourself to a single type of investment. In this way, even if one asset class performs poorly, the others may compensate.
8. Remember that the maximum age for converting your RRSP is 71 years.

TFSA

A Tax-Free Savings Account (TFSA) allows you to save up to $5,500 per year and offers a number of advantages, including:

• Investment income (interest, dividends, capital gains or income trust distributions) generated in this account are tax-sheltered.
• Money withdrawn from this account is tax-free and will not affect your eligibility for federal income-tested benefits and credits, which are based on your income.

 Its flexibility meets the requirements of many Canadians aged 18 and up, who will gain from investing in the TFSA, for example:

• Young adults or couples with young children: to prepare for the unexpected, set up an emergency fund or save for a down payment on a home or vehicle.
• High-income workers: to build up additional income in a tax-free environment ahead of retirement.
• Retirees seeking to keep their investments growing tax-free: since withdrawals from a TFSA are not classified as income, they do not affect the Old Age Security Pension or Guaranteed Income Supplement.

For many investors, the TFSA will serve as a complement to their RRSP. 

Here are some of the Differences between a TFSA and an RRSP: