RRSP or TFSA? (You may be surprised)

A great perspective from my buddy JJ on TFSA vs. RRSP which has me re-thinking my strategy.

engineering wealth

According to a recent survey from the Bank of Montreal (http://newsroom.bmo.com/press-releases/bmo-annual-tfsa-report-tfsa-adoption-among-canadi-tsx-bmo-201312190918655001) most people still don’t have a Tax Free Savings Account (TFSA), although nearly twice as many people in 2013 had one than in 2012.

TFSAs are AWESOME

I like TFSAs much better than Registered Retirement Savings Plans (RRSPs). Why? Like a RRSP they grow tax free, but instead of getting the tax credit up front you get it at the end. Since most people I know don’t reinvest their “tax refund” from their RRSP, back into their RRSP dollar for dollar, you are better off investing in a TFSA. You pay NO TAX on anything you withdraw from you TFSA. All withdraws from an RRSP – principle and growth, is taxed (and counted) as income. Income is taxed at double the rate of capital gains. Withdraws/income from your RRSP also take away from Old…

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