Savings PLans
RRSPs
A Registered Retirement Savings Plan (RRSP) allows you to save for retirement on a tax-deferred basis, so your money grows faster!
Pre-tax money is placed into an RRSP and grows tax-free until withdrawal, which is taxed at the marginal rate.
RRSPs have two main tax advantages. First, contributors may deduct contributions against their income. For example, if a contributor's tax rate is 40%, every $100 they invest in an RRSP will save that person $40 in taxes, up to their contribution limit. Second, the growth of RRSP investments is tax-deferred. Unlike with non-RRSP investments, returns are exempt from any capital gains tax, dividend tax, or income tax.
TFSAs
A TFSA or Tax-Free Savings Account is a tax-advantaged savings/investment account designed to help you save money throughout your life while enabling you to potentially grow your money faster as there is no tax assessed on earned interest, dividends, or capital gains – not even when you withdraw funds, which you can do at any time for any purpose.
TFSAs can hold complex products – such as securities like certain mutual funds, exchange-traded funds, and equities – that go above and beyond your usual savings account.
Segregated Funds
A segregated fund is a type of investment vehicle commonly used by Canadian insurance companies to manage individual, variable annuity insurance products. A segregated fund offers investment capital appreciation and life insurance benefits.
Investors can expect to pay a slightly higher total expense ratio on segregated funds due to their more complex structure. Additionally, these fund offerings typically do not have aggressive fund objectives. Therefore, returns from the funds tend to be more modest.
