While there are a few differences between registered and non-registered accounts, both can form part of a suitable investment plan.
Government-registered accounts, like RRSPs and TFSAs let you grow your savings tax-free. They have contribution limits, meaning you cannot put in more than a certain amount of money or you could face financial penalties.
Non-registered accounts are taxable but allow for much more flexibility, like the fact that they do no not have contribution limits.
For most people RRSPs are the right type of account only when either using the RRSP:
- During high earning years to save toward retirement, where there is little to no chance of needing that money before retirement, or
- Toward the Home Buyers' Plan (HBP) for first-time home buyers.
There are no fees for withdrawing from a TFSA, and there are no tax impacts to making withdrawals should you need to do so.
- In general, most people should use a TFSA up to its limit for their savings goals.
Not sure whether you should be investing in a TFSA, RRSP or non-registered account? No problem! Reach out in the app and we can help.