Investments

Registered savings and investments

Canada gives you five registered accounts, and each one is built for a different job: retirement, a first home, a child's education, money you might need back, and long-term security for someone with a disability. Using the right one matters more than picking investments, because the tax treatment is where most of the difference comes from.

What We Arrange

Five registered plans

RRSP — Registered Retirement Savings Plan

The main retirement vehicle. Contributions are deductible against your income, so you get tax relief now, and everything inside grows untaxed until you draw it out in retirement — when your income, and usually your tax rate, is lower.

An RRSP is not itself an investment. It is a wrapper that can hold funds, GICs, stocks and bonds. More on RRSPs.

TFSA — Tax-Free Savings Account

The flexible one. Contributions are made from money you have already paid tax on, and in return nothing inside is ever taxed again — not the growth, and not the withdrawals. You can take money out for any reason without a tax bill, and the room comes back the following year.

That flexibility makes it the right home for money you might actually need. More on TFSAs.

RESP — Registered Education Savings Plan

For a child’s post-secondary education, and the only one of the five where the government adds money to yours. The Canada Education Savings Grant matches a percentage of what you contribute each year, up to an annual cap.

Education costs rise steadily, and the alternative to saving is usually borrowing — by the parents or by the student. More on RESPs.

FHSA — First Home Savings Account

Introduced in 2023 and the best of both worlds for a first home: contributions are deductible like an RRSP, and qualifying withdrawals are tax-free like a TFSA. You can put in up to $8,000 a year to a lifetime maximum of $40,000.

If you are saving for a first home and not using one of these, you are almost certainly paying more tax than you need to. More on FHSAs.

RDSP — Registered Disability Savings Plan

Long-term security for someone eligible for the Disability Tax Credit. The government adds matching grants and, for lower-income households, bonds paid even where nothing is contributed — which makes it the most generous of the five for those who qualify.

Which account first?

Most people do not have spare money for all five. A rough order of priority holds for the majority of households.

Take free money first

If you have a child and can contribute to an RESP, the education grant is the highest guaranteed return available anywhere — the government matching your contribution beats any investment return you can rely on. The same logic applies to RDSP grants and bonds, more strongly still.

Then match the account to the timeline

Money you may need within a few years belongs in a TFSA, because you can take it out without tax or penalty. Money for a first home belongs in an FHSA, which gives you the deduction and the tax-free withdrawal. Money you will not touch until retirement belongs in an RRSP, where the deduction is worth most while your income is high.

Then think about your tax bracket

An RRSP deduction is worth more the higher your income. Early in a career, when income and tax rate are lower, filling a TFSA first and moving to RRSP contributions later often produces a better outcome — the contribution room does not expire, so nothing is lost by waiting.

Contribution limits change. Several of these are indexed to inflation and revised annually, and unused room usually carries forward. Before you act on any figure — here or anywhere else — check your own limits, which are shown on your CRA My Account and on your notice of assessment. They are personal to you, not the same for everyone.

No obligation

Work out the order that suits you.

Tell an advisor what you are saving for and roughly when you will need it, and you will get a straight view of which accounts to fill first. That conversation costs nothing and it is worth having before you open anything.

Talk to an advisor

Questions about registered plans

Yes, and most people should. They are not alternatives to each other — they do different jobs, and each has its own contribution room that is unaffected by the others.

The CRA charges a penalty tax on excess amounts for every month they stay in the account, so it is worth checking your room before contributing rather than after. Your notice of assessment shows RRSP room; CRA My Account shows the rest.

Generally no — RRSP, TFSA and FHSA room carries forward if you do not use it, though the FHSA has its own rules about how long the account can stay open. Nothing is lost by starting later, only the growth you would have had.

Neither, in the abstract. The RRSP wins when your tax rate is higher now than it will be when you withdraw; the TFSA wins when it is not, or when you may need the money back. For many people the honest answer is both, in that order as income grows.

No — you can open any of these at a bank yourself. Where advice earns its keep is deciding which to fill first, how much, and what to hold inside, which is where most of the long-run difference is made.

Not sure which account to fill first?

Call 437-428-2828 and talk it through with a licensed advisor. Mon–Sat, 9am–8pm ET. No obligation, and nobody will push you to buy on the call.

Call 437-428-2828