Should I contribute to a TFSA, RRSP, or Both?
With the Tax-Free Savings Account(TFSA) available for saving in a tax-free environment, does it still make sense to contribute to a Registered Retirement Savings Plan(RRSP)?
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RSPs can work well if you contribute while you are in a high tax bracket and withdraw when in a lower tax bracket. You can generate a higher net rate of return with an RRSP when the effective tax rate at the time of withdrawal is lower than the effective tax rate at the time of contribution. A TFSA can provide a higher return if the reverse occurs.