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

Penticton arena’s will get Band-Aid solution for now

Penticton city council decided to return the $6 million Strategic Priorities Fund

Beloved Okanagan-Skaha school district champion dies

Bruce Johnson was a teacher, principal and long-serving school trustee in Penticton

Okanagan group urging drivers to watch for motorcyclists

Warmer weather means more motorcycles on the road and drivers are urged to be vigilant

Penticton mourns respected educator Bruce Johnson

Memories of former teacher, principal and trustee Bruce Johnson are flooding social media

Stunning documentary to be shown in support of Okanagan nordic club

This Mountain Life is a documentary that will be shown twice in support of the McKinney Nordic Club

VIDEO: Sunny skies in the forecast makes for a great start to spring

Mostly sunny skies with a chance of rain by Friday evening in the Okanagan Valley

B.C. man sentenced for tying up, assaulting and robbing another man at hotel on Vancouver Island

Gabriel Stephen Nelson robbed and assaulted travelling businessman in Nanaimo in 2017

Deadline extended through April to nominate top B.C. educators

Second year of Premier John Horgan’s awards offers $3,000 bursary

B.C. girl and her toy monkey make videos to fight negativity on Facebook

Ava Ast created the Ava and Cello’s Good Deed Page last month

Detective dog, from Nelson, joins fight to combat invasive mussels

K9 Major will be on the road starting this month, hunting for quagga and zebra mussels

No cause yet for grassfire near Kamloops

Fire was about 1.8 hectares in size

Paramedic staff shortage at critical level: B.C. union

A number of units were out of service due to lack of staffing in Lower Mainland, union says

B.C. lottery winner being sued by Surrey co-workers

They claim he owes them $200,000 each, in a lawsuit filed in B.C. Supreme Court in Vancouver

Case made for free tampon dispensers in schools

Advocate says access, anonymity key to providing less stressful experience for female students

Most Read