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Where to Invest

There are several types of accounts that can be used for your investments.  There is a time and place for each of these accounts and there is definitely overlap in some areas too.  Information about account types can easily be found elsewhere so I've kept my descriptions focused to the main points and provided links to more detailed information (as a start).  After reading just this page you'll be armed with enough Google search phrases to keep you going if you need it.

RRSP (Registered Retirement Savings Plan)

In an RRSP (sometimes called just RSP), for any money that you place into the account, you get a tax deduction. Unfortunately, there are limits on how much you can contribute every year. Once your money is in the account, if it grows it will be sheltered from income tax (what happens in the account, stays in the account).  As a result your money can grow much faster than if the money was in a non-registered account. When you withdraw, the money will be taxed as if it is income, but hey - it's been growing for 30 or 40 or 50 years tax free so try not to complain too much! 

RRSP and related plans - Canada Revenue Agency
Frequently Asked Questions: RSPs - TD Canada Trust

Spousal RRSP (Registered Retirement Savings Plan)

A Spousal RRSP (sometimes called a SRSP) is a special type of RRSP.  In a Spousal RRSP one spouse opens the account (Spouse A) and the other spouse contributes to it (Spouse B). When the money is withdrawn, it is taxed in the hands of the spouse who opened the account (Spouse A).  Couples use it to spread the investments between themselves so that at retirement, both spouses can aim to draw the least amount of tax overall.  Note that there are rules that govern how long the money must reside within the account before it deemed property of the other spouse.

How does a spousal RRSP work - Gena Katz - Morningstar

TFSA (Tax Free Savings Account)

The Tax Free Savings Account is another account that allows your money to grow tax free. However, contributions to the account do not provide a tax deduction but withdrawals from the account do not incur taxes either.  The current annual maximum contribution limit is $5,000 per year.

RESP (Registered Education Savings Plan)

The RESP is a plan that is used to save and later help pay for your child's education.  The RESP is a another account that allows your money to grow tax free. Contributions to the account do not provide a tax deduction, but they often do provide a grant from the government that goes straight into the account.  Withdrawals are taxed in the hands of the child, who would normally be in a low income tax bracket, and therefore would not incur very much in taxes. There are rules that govern how much can be contributed each year (per child) and what constitutes a valid educational program.


In a Non-Registered account, contributions do not provide a tax deduction and the investments do not grow tax free. Withdrawals do not attract any additional taxes as your money as been taxed all along. 

RRIF (Registered Retirement Income Fund)

Once you turn 71, your RRSP becomes and RRIF. At this point, you can no longer make contributions and you must withdraw a minimum amount each year.

RDSP (Registered Disability Savings Plan)

A Registered Disability Savings Plan is a savings plan that is used for parents (and others) to help to save for a person who is disabled.

Registered Disability Savings Plan - Canada Revenue Agency

Comparison Table

I have created a comparison table below to quick show the main differences between the types of accounts. Note that one of the main differences between the account types are the tax implications. As a result I have made another page called Tax Planning which goes into these details a bit more.

 Action     TFSA             RRSP/RRIF Non-Registered RESP
Cash put into Account no refund provided refund provided into your bank account no refund provided Government grant deposited into RESP account
Purchase of Investments                         no tax no tax no tax  no tax
Selling Investments (and Dividends, etc) not taxed (it is still sheltered) not taxed (it is still sheltered) tax impliations not taxed (it is still sheltered)
Cash out of Account no tax on withdrawal 100% of amount withdrawn taxed as incomeno tax on withdrawal - original contribution amount not taxed
- accumulated income is taxed as income at hands of student

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