Feel good about both options.

TFSA or RRSP? Why choose?

Combine your investment options for greater flexibility

As an investor, figuring out where to put your money is one of the biggest decisions you’ll make. Two popular options are the Registered Retirement Savings Plan (RRSP) and the Tax Free Savings Account (TFSA).

RRSPs are a great place to put retirement savings because they are tax deferred. You receive a tax refund when you contribute to an RRSP, and then you are taxed at your marginal tax-rate at the time of withdrawal. The idea is that when you retire your income will be lower than when you are working, therefore when you withdraw you will have a lower tax burden.

On the other hand, if you’re saving for a new car or a dream vacation, you may be better served with a TFSA. TFSA contributions are not tax-deductible, but withdrawals are completely tax-free.

Invest in short, medium and long-term savings

But do you really have to choose? Most people have a combination of short, medium and long-term savings goals. For this reason, it may be useful to have both a TFSA and RRSP.

Jill Diemer, a Certified Financial Planner from Prospera Credit Union, is an advocate of holding both a TFSA and RRSP. “Both accounts can be an important part of your investment strategy.”

By placing your short, medium and long-term investments in a TFSA, you’re giving yourself options. If something unexpected happens and you need money from your investments, the last thing you want is a big tax bill from withdrawing your RRSPs early. That is where your TFSA investments come in handy.

On the other hand, you also have the flexibility to move money out of the TFSA and into your RRSP and receive a reduction in taxes. “With some goal setting and planning, a certified planner can make sure you’re taking full advantage of both options,” Diemer says.

Convertible term deposit offers flexible option

Speaking of flexible options, what could be better than a convertible term deposit? Prospera Credit Union is offering a 30 month term at 2.5%, with the option to rewrite if rates go up. This investment provides peace of mind that if rates change, you’re still getting great value for money.

***

A credit union serving British Columbia for more than 70 years, Prospera is proud to serve its 63,000 members from locations in the Lower Mainland, Fraser Valley and Okanagan.

Comments are closed

Just Posted

McCallum’s canal pitch took Surrey councillors by surprise

City government has more important issues pressing than building a canal, councillors say

‘He’s still with me on the daily’: Slain friend motivates Surrey’s Lyles to make it with B.C. Lions

Jaylen Sandhu a source of inspiration for running back, a former standout with Lord Tweedsmuir

Surrey RCMP conducting drug-related search warrant

Traffic closed in both directions on 128th Street, between 64th and 66th Avenue

South Surrey senior ‘irate’ over policing-transition venue change

Pat Anderson says she disagrees with the transition plan – but never got a chance to say so

Cloverdale Toastmasters celebrate 25 years of learning and laughter

Cloverdale club is a high achieving, yet laid-back Toastmasters group

VIDEO: ‘Avengers: Endgame’ to be re-released with new footage

‘Avatar’ holds global box office record at $2.788 billion, while ‘Endgame’ stands at $2.743 billion…

B.C. teen killed by falling tree near Victoria

Second youth also injured in freak incident during field trip at Camp Barnard near Sooke

Elias Pettersson wins Calder Trophy as NHL’s top rookie

Vancouver forward first Canuck to win award since Pavel Bure in 1992

FVRD chair calls B.C. incineration plan for Philippines waste ‘disturbing’

Metro Vancouver ‘uniquely capable’ of safely disposing of waste coming back to Canada, say officials

VIDEO: Acknowledging skeptics, finance minister vows to build Trans Mountain project

Bill Morneau said he recognizes ‘huge amount of anxiety’ in Calgary over future of oil and gas sector

Shovels could be in the ground on Trans Mountain by September, CEO says

Ian Anderson points to weeks likely required for NEB to reinstate 2016 regulatory record

Scorpion gives birth after hitching ride in B.C. woman’s luggage

A Vancouver woman inadvertently brought the animal home from a trip to Cuba

RCMP allows officers to grow beards

Members can now wear beards and goatees, as long as they’re neatly groomed

Girl, 10, poisoned by carbon monoxide at B.C. campsite could soon return home

Lucille Beaurain died and daughter Micaela Walton, 10, was rushed to B.C. Children’s Hospital on May 18

Most Read