TFSA or RRSP? 2024
One of the most common investment questions Canadians ask themselves today is, “Which is better, TFSA or RRSP”?
Here’s the good news – it doesn’t have to be an either or choice. Why not do both? Below are the features of both plans to help you understand the differences.
Tax-Free Savings Account (TFSA)
Any Canadian resident age 18 or over may open a TFSA. Contribution is not based on earned income. There is no maximum age for contribution.
- From 2019 to 2022, the maximum contribution each year has been $6,000, was increased to $6,500 in 2023. In 2024, the contribution has been increased again to $7,000.
- There is carry forward room for each year in which the maximum contribution was not made. For those who have not yet contributed to a TFSA, the cumulative total contribution room for 2024 is $95,000 and will increase each year in January. The TFSA was first introduced in 2009.
- The deposit is not tax-deductible, but the funds accumulate with no income tax payable on growth.
- Withdrawals may be made at any time on an income tax-free basis. Withdrawals create additional deposit room commencing in the year after withdrawal.
Basic Planning for Young Families
As a young family, you will be facing a lot of new challenges that you may or may not be prepared for along the way. Whether it’s children, a mortgage, or unexpected expenses that come up, now is the perfect time to start thinking about all the potential pitfalls that may arise.
In this article we want to share some of the ways that insurance can help you stay ahead of these issues, as well as how to prepare yourself for some of life’s obstacles that you and your family may face.
What Issues Should Concern you the Most?
Now that you’re starting a family, your life is just one piece of the puzzle. Your spouse and any children are also top priorities, meaning that you should consider what could happen to everyone in a variety of scenarios. Here are some crucial questions you and your partner should discuss:
What happens if one of us dies? – While this question may seem a bit morbid, it’s a necessary possibility to plan for, particularly if you are a one-income household. Even with two breadwinners, chances are that your bills and financial responsibilities are too much for one person, meaning that you need to supplement any lost income as a result of one of you passing away. Read more
After death of spouse, CPP survivor’s benefit can be a shock
Here’s an important article I wanted to share from CBC News. It addresses some of the scenarios widows and widowers could face if they continue to be reliant on CPP after the death of a spouse.
TFSAs aren’t just for short-term savers anymore
It’s been a decade since the TFSA was born. It’s grown up quite a bit over that time.
By Bryan Borzykowski for MoneySense.ca
It was hard to know it at the time, but February 26, 2008 has become one of the most significant dates in Canadian investing history. That afternoon, Jim Flaherty, then Minister of Finance, unveiled the Conservative party’s budget and, for the first time, mentioned the Tax-Free Savings Account. On January 2, 2009, the first TFSA was opened and $5,000—the maximum contribution limit that year—was deposited by some savvy investor.
When Flaherty introduced the TFSA, he listed a variety of ways someone might use the account. An RRSP, he said, was meant for retirement savings. A TFSA, where after-tax dollars can grow tax-free, was “for everything else in your life,” like buying a first car, saving for a first home and setting aside money for a “special project” or a personal indulgence. With contribution room only increasing by $5,000 per year for the first few years, using it to save for something made a lot of sense.
Read the rest of the article at www.moneysense.ca
