How to Choose Between a TFSA, RRSP, or an RESP

When it comes to saving for your retirement, many people out there wonder which is better; a Tax-Free Savings Account (TFSA), Registered Retirement Savings Plan (RRSP), or a Registered Education Savings Plan (RESP)? All will help you save for your future, and save on taxes, but each works in different ways.

Understanding these investments will help you decide which is best for you. If you are looking for expert advice, Elham Rezaei, a professionally Licenced Insurance Agent and Mutual Fund Representative with World Financial Group Insurance Agency of Canada Inc. WFG Security Inc., will help you choose the right options.

As a WFGIA agent, Elham comes with a wealth of experience and knowledge to assist you in achieving your personal investment goals.

How Each Plan Works

With an RRSP, any contributions you make can be deducted from your taxable income, up to your contribution limits; while investment gains (dividends and capital gains) are tax-free. The only time you pay taxes is when you withdraw money from your RRSP in retirement.

A TFSA works similarly to RRSPs: each year, you have certain contribution limits, and any contributions can grow tax-free within the account. The difference is that a TFSA uses after-tax dollars, so the CRA won’t tax you again later, and you are allowed tax-free early withdrawals.

An RESP is a great investment if you want to save money for your child’s post-secondary education. Your RESP investments grow tax free, meaning no taxes on capital gains and no income taxes on interest and dividens earned. Best of all?, the federal government offers a grant of up to $7,200 over the life of the plan.

There is no one-size-fits-all approach to investing for retirement, so selecting the right advisor, like Elham, is key if you want to grow your nest egg.