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Investments
RRSP
Registered Retirement Savings Plans are best used for retirement savings, tax deductions and buying your first home!
A Registered Retirement Savings Plan, also known as an RRSP is a savings vehicle created by the government of Canada to help Canadians save for retirement. You can keep the money in a low risk, high interest savings plan or can invest in many aspects of the equity and bond markets.
Each dollar that you save into your RRSP in a given year can be used as a tax deduction against your income. So if you make $100,000 in a year and put $10,000 into your RRSP then you will now only be taxed on $90,000 of your income for that year. This helps you save for retirement faster!
There are maximum amounts (Based on your income) that you are allowed to put into your account in a given year. This is called your contribution room which can be found on your tax returns. For example, if you earn $100,000 (gross income) annually, you can put up to $22,000 into your plan per year and only have to pay tax on $78,000.
TFSA
Tax Free Savings Accounts are best used for short, medium and long term savings as well as tax savings on the interest earned.
A Tax Free Savings Account also known as a TFSA is a savings vehicle created by the government of Canada to help Canadians save money for short, medium and long term investments.
Each dollar that you save into your TFSA can be kept in a high interest savings account or invested into mutual funds, segregated funds and bond and equity markets. Any interest, dividend or capital gain earned is completely tax free. You can just take the money out and use it whenever you'd like. One thing to watch out for is if you take out an amount then you cannot put that amount back in during the same calendar year. For example if you took out $5000 and were already maxed out then you could not put that $5000 back in until the next calendar year.
The TFSA was created in 2009, the limit was $5000 and has increased since then to $5500. If you haven't put any money into a TFSA then you can check for up to date contribution amounts online or contact one of our advisors.
Non-registered Investments
Non-registered investments can be used if you have maxed out your registered investment vehicles like TFSA and RRSP and would still like to invest.
Non-registered investments (Segregated Funds) can be used when your TFSA, RRSP and other investments are maxed out. Many segregated funds are both life insured and have long term pricincipal guarantees of up to 5% per year for life. This can supplement pension income or help create a long term pension plan. Non-registered accounts have no limits as to how much you can invest and what vehicles you can use for investment. With a non-registered account you must pay taxes on all interest, dividends and capital gains earned in any calendar year. One can invest in high interest savings, funds, and other investment options.