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

Major milestone for Penticton hospital construction

Substantial completion of the tower marked

Photos: Wiltse Elementary Christmas Concert

Penticton school celebrates the holiday season

Water samples good in Hedley

Water woes in Hedley had some residents questioning the communication plan of the HID earlier this week

Penticton’s stone circle standing the test of time

Celebrate the winter solstice at Penhenge

Retailers feel impact of generous return policies

Technology data tracking can clamp down on fraudulent abuse

Story of the Year: Deadly Humboldt Broncos bus crash

The Canadian Press annual survey of newsrooms across the country saw 53 out of 129 editors cast their votes for the Humboldt Broncos bus crash.

Trump signs order to create US Space Command

President Donald Trump signs an executive order to create a U.S. Space Command.

Groups preparing new pipeline legal challenge, argue government’s mind made up

A Vancouver-based environment charity is readying itself to go back to court if the federal government reapproves the Trans Mountain pipeline expansion.

Notorious Toronto triple killer gets third consecutive life sentence

Dellen Millard gets third consecutive life sentence for father’s death.

‘Subdued’ housing market predicted in B.C. through 2021: report

The Central 1 Credit Union report predicts “rising but subdued sales” over the next three years, with little movement in median home prices.

A journey through 2018’s top pop culture moments

Was there any pop culture this year? Of course there was.

‘A stronger Alberta:’ Ottawa announces $1.6B for Canada’s oil and gas sector

Price of Alberta oil plummeted so low that Alberta’s Premier said Canada was practically giving it away

Wicked weather, including heavy snow, rainfall, hammers southern B.C.

Environment Canada has posted winter storm warnings for the Coquihalla Highway, Highway 3

Caretaker jailed, must pay back money after stealing $260K from elderly B.C. couple

Antonette Dizon, now 50, had been hired to provide extra care for Henry and Helen Abfalter

Most Read