RRSP or TFSA? Go For TFSA When You Can’t Decide

TFSA: You Can’t Go Wrong

First Published Date: February 18, 2017

This time of the year, when the RRSP deadline is fast approaching, it’s hard not to notice an article about TFSA or RRSP in Canadian newspapers or magazines. However, if you get confused after reading so many of these articles and can’t decide, going for a TFSA is not a bad option at all.

In the past, I wrote about TFSA. As far as I can remember, that was the only time I wrote about TFSA, as after seeing so many articles about TFSA and RRSP again and again and writing about the same stuff I decided not do discuss it anymore. And that is a good change for someone who is trying to sort out TFSA and RRSP will only be more confused after bombarded with too much information.

If you are confused about these two and still not sure, the best thing to do is park your money in a TFSA, rather than in an RRSP. The reason is very simple: TFSA lets you able to take out your money any time without paying back withholding taxes, unlike an RRSP. One thing you need to keep in mind is that the money you are taking out from your TFSA will create equal contribution room next year, not in the same year.

And what should you do if you want to get some clear grasp of TFSA? Talk to a qualified financial professional face to face. And yes, don’t forget to write down all your questions and concerns before meeting

Can A Minor Open An RRSP?

Minor RRSP

First Published Date: September 25, 2016

Contrary to popular belief, there is no age restriction to open an RRSP (Registered Retirement Savings Plan).
Here are the requirements to open an RRSP for minors:

– A SIN (Social Insurance Number)

– Legitimate earned income

– Recorded income with proper documents

– Filed T1 tax return

Advantages of a Minor RRSP

There are lifelong advantages of opening an early age RRSP. Here are some of them:

– There is no need to make contributions right away. Contributions can be made anytime later – with no time limit.

– RRSP room keeps accumulating, which can be carried forward indefinitely

– Increases lifetime contribution limits

– Allows minors to contribute to RRSP right after starting in the work force because of the available contribution room.

– RRSP deduction can be claimed later on when there is enough taxable income.

– Provides income-splitting opportunity for business-owner parents. Kids can work as an
employee for their parents’ business and salary paid to them will be tax deductible and it will create contribution room for kids.

– Provides an opportunity to teach kids about personal finances.

– Contributions start growing tax free inside an RRSP.

Author/Copyright: Ahmed Dawn www.adawnjournal.com

Disadvantages of a Minor RRSP

– Not all financial institutions offer minor RRSP.

– A co-signer may be required.

– Financial institutions may limit what types of products can be purchased.

The best thing to do would be shop around and find the right institutions that suit your needs. Minor RRSP can be a great investment vehicle towards a better financial future with lifelong benefits for kids.

How to Buy an RRSP?

What Is An RRSP?

First Published Date: December 28, 2008

An RRSP (registered retirement savings plan) is not something you actually buy. You buy qualified investments to hold inside an RRSP. This is a type of account and you can hold a variety of products inside your RRSP.

What Products You Can Buy?

You can buy mutual funds, GICs, stocks, savings account and so on. These are just some basic products to mention. There are many other investment products you can buy and hold inside your RRSP account.

Is It Complicated?

Depending on what you are buying, it can be complicated to buy certain products such as stocks, bonds, etc. In my book Invest Now, I have described in detail how to buy these products. Today, in simple words, I will explain how you can open your first RRSP in a snap.

Two Easy Solutions for Novice Investors

Option One – Walk Into Your Local Bank

This is the easiest way to buy. Just walk into your local bank branch and your personal banker will be able to explain ins and outs of RRSP and what products you can buy based on your personal needs. Most of the banks have a variety of products to choose from, and you can pick the one that best suits your needs.

I like the idea of opening an RRSP in your local branch because it is very easy and simple. This option gives you the opportunity to talk to a live person, and you can hold your RRSP with the same institution you are already dealing with – that translates into less hassle and paperwork. Also, you have the option to transfer your money into your RRSP from your chequing or savings account.

Option Two – Do It Online

Financial institutions like ING Direct or President Choice Financial let you purchase RRSP online. This is good in one sense that you are doing everything from the comfort of your own home; however, there is no one sitting in front of you to answer your questions. Although they do have customer support to call, it’s not the same as talking to a person in front of you.

Final Word

One major advantage of going to a bank is that bankers are able to recommend and advise products based on your individual needs. However, this is not the case if you choose online option. Customer service reps will answer your questions and guide you through the procedures to choose a product, but they are not licensed to advise.

These are the basic and simple procedures to buy your RRSP. If you are looking to buy a wider variety of products, I would recommend award-winning book Invest Now – available at Chapters.Indigo bookstores and at all online retailers.

To streamline and minimize blog maintenance, I will be discontinuing maintaining the Canadapersonalfinancewebsite.com website (however, I will still hold the domain). I will gradually move all articles from this site to A Dawn Journal. This article originally published on the above website on Dec 28, 2008.