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  • Writer's pictureMatt Wolodarsky

What to use when - RRSP vs. TFSA

It's that time of the year again. The deadline for contributing to an Registered Retirement Savings Plan (RRSP) for the 2019 tax year is fast upon us. March 2nd will be here before you know it.

The RRSP is not the only option we have when it comes to protecting our income from taxes. The Tax Free Savings Account (TFSA) has been around for 11 years now. The TFSA allows your investments assets to grow and earn income, tax free. Sounds like an RRSP? The big difference is that the TFSA, unlike RRSPs, earns no up-front tax refund but as an advantage over the RRSP the government does not get a single dime of your appreciated capital or investment income when your TFSA contributions are later withdrawn.

What should you use?

With both the RRSP and TFSA competing for you hard earned and constrained savings, which should you use? Like most things in life, this should not be an either/or debate, both are good and should be considered for their unique advantages.

When determining your optimal strategy for allocating investment across your RRSP and TFSA it is best to consult with your tax or financial advisor to consider your unique circumstances. But, for most people it’s best to leverage both tax shelter vehicles – your RRSP and TFSA – to supercharge your investments and prepare for your retirement.

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