If you count yourself amongst one of the many Canadians for whom March 2 came and went this year without a second glance at the calendar, don't worry: even though the contribution deadline for 2014 RRSP's has passed, there is another investment option that may be worth considering.
While RRSP’s are a wonderful vehicle for many Canadians, for others they are not necessarily the best option for everyone. An alternate or complimentary investment strategy consideration for many Canadians is the Tax Free Savings Account (TFSA). TFSA’s are simply another investment vehicle, but the taxation rules are different. Interestingly, many people are surprised to learn that despite having the words “savings account” in its title, their TFSA can hold the exact same investments that their RRSP can, such as GIC’s, mutual funds, or stocks, amongst other choices. TFSA’s can be a phenomenal tax shelter, when used properly and invested wisely.
Canadians in the lower income tax brackets may find a TFSA makes more sense over investing through an RRSP as they are perhaps not as concerned with receiving tax deductions upfront, and would rather experience tax-free growth and withdrawals down the road. For others, a combination strategy could provide a better long-term outcome.
Why not speak to a financial professional to determine what investment vehicles and strategies will make your money work as hard for you, as you do for it?
Please don’t hesitate to contact me if you have any questions about RRSP’s or TFSA’s and what might make the most sense for you, or if you’d like a complimentary no-obligation review of your current portfolio.
Jaclyn Carmichael Financial Coach 1 (604) 888-4934 (w) 1 (604) 220-5719 (m)