the account that gives you a tax refund 👀
we've talked about the TFSA and the FHSA... but there's one Canadian account i haven't given enough love to yet: the RRSP 👀
Registered Retirement Savings Plan. i know, the name sounds like something your parents bring up at dinner 😅 but hear me out.
here's the deal: when you put money into an RRSP, you get to deduct it from your income at tax time. so it can literally lower your tax bill (hello, refund 💸).
why i like it:
- contributions are tax-deductible → lower taxes now
- your money grows tax-free while it stays inside
- like a TFSA, you can hold ETFs and index funds in there, not just cash
the catch? you DO pay tax when you withdraw in retirement. but the idea is you're likely in a lower tax bracket then than in your peak earning years, so you come out ahead 🤷🏻♀️
a couple things to keep in mind:
- there's a contribution limit (18% of last year's income, up to a max)
- it's built for retirement, so it's not the account to dip into for everyday stuff
for me, the TFSA is usually the first thing i fill... but once you're earning more, that RRSP tax deduction really starts to shine 💛
not financial advice, always do your own research 💛
do you use your RRSP yet, or is TFSA your main squeeze? 👀
