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Are you planning to have a smart tax-effective way to build your retirement savings? You can choose from range of safe and simple registered saving products such as RRSP, RRIF, RESP and TFSA.

Registered Retirement Savings Plan (RRSP)

RRSP (Registered Retirement Savings Plan) is generally a common term but there is a lot more to this term rather than just putting your money and waiting for the retirement to redeem the principal with extra interest.

RRSP or Registered Retirement Savings Plan is a special type of investment designed to help Canadians save for Retirement. You or your spouse on common-law partner can make a contribution to RRSP. These contributions can be used to reduce your tax. Income earned from your RRSP is tax exempt provided the income remains in the plan. Receiving payment or withdrawing from the plan may attract some tax payment.

Benefits from RRSP include the following:

  1. Tax Credits
  2. Give you a diversification in your investment portfolio
  3. Give you compound interest benefits
  4. Could be used as a down payments for first time home buyers.
  5. Tax-Deferred Growth
  6. Can hold different types of investment.

 

Registered Retirement Income Fund (RRIF)

At the certain age of retirement, you will need to convert your RRSP into Retirement Income Option. Registered Retirement Income Fund (RRIF) is designed to pay you a minimum amount each year starting from the year after the enrollment.

  1. Keep your funds tax sheltered
  2. Control over the investment of your funds
  3. Option to convert your funds to more secure guaranteed income at any time

Your withdraw from your RRIF is considered income and will be subject to taxes.

 

Registered Education Savings Plan (RESP)

A bright future requires higher education so you need to get financial support with Registered Education Savings Plan that is an effective savings tools to help your children or grand children attain higher education. With RESP, one can:

  1. Contribute up to a lifetime maximum of $50,000 per child
  2. You can receive $500 per beneficiary per year.
  3. All the money saved in the plan is tax-free until it’s withdrawn
  4. Only the accrued interest is taxable as income once the beneficiary enrolls in his/her studies

 

Tax Free Savings Account (TFSA)

The Tax-Free Savings Account (TFSA) is a flexible, registered, general-purpose savings vehicle that allows you to earn tax-free investment income. This can help you save towards your short and long term financial goals. The TFSA can be used to complement other registered savings such as RRSP and RESP.

Benefits from TFSA include the following:

  1. No tax paid on income and withdrawals
  2. No income requirement to open one
  3. Can be withdrawn anytime for any amount up to the total investment amount.

 

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