RRSP
A Registered Retirement Savings Plan (RRSP) offers several advantages. It allows you to contribute pre-tax income, reducing your current tax burden. Your investments grow tax-free within the RRSP until withdrawal, potentially resulting in significant growth. RRSPs are particularly valuable if you expect your retirement income to be lower than your current income, as withdrawals are usually taxed at a lower rate. Additionally, RRSP contributions can be used to defer taxes until retirement, providing financial flexibility.
TFSA
A Tax-Free Savings Account (TFSA) provides multiple advantages. Contributions are made with after-tax income, but any investment growth and withdrawals are entirely tax-free. TFSA funds can be withdrawn at any time for any purpose without penalties, making it a flexible option for short-term goals. Unused contribution room accumulates and carries over, allowing you to maximize savings over time. TFSA savings don't affect government benefits or tax brackets, and they're suitable for various investment types, from savings accounts to stocks and bonds.
