Completely agree and I have both but as I get closer to retirement, tax free income from a TFSA is super important for most people. Depending on your income, and lets face it, most Canadians have a much lower income in retirement, It could be the difference between qualifying for different programs such as GIS, for example. Grants for home updates etc. are also income tested. You could technically draw a 50k salary from your TFSA (yes, unlikely) and still qualify for full GIS and other programs. All that said, for a higher income worker, I like the idea of RSP contributions with the refund rolled into a TFSA. Its crucial that as part of your retirement plan, that the refund be rolled back into that plan and not spent on other frivolous things
I stick with the TFSA and cashed out of the RRSP and invested it else where. Didn't like getting hit when the money was needed and moved. It's not a comfortable thing to go through. We want to move away from these hits the Government makes and just let our money grow and getting rid of the RRSP was, in my opinion, breaking away from Government Control, in that area and gives me more control and flexibility with my money.
New sub here. Ive been catching up and watching all your videos. Really great info. Thank you! For this one, If one can max both accounts, whats the best type of stocks or ETFs for each?
And thank you! I’m a huge fan of ultra diversified ETF portfolios. Keeps the cost down, keeps it simple, and eliminates human error. I’ll be doing a vid on that shortly :)
Interesting video. Have an RRSP and TFSA for retirement but a different for shorter term goals like renos, vacations, etc. Don't see this aspect of using a TFSA covered much. You covered contributing to RRSP and reinvesting tax return into RRSP but what about strategy I use? Contribute to RRSP and contribute tax return to TFSA. Seems to me to be the better option but curious on if you thing that is true. Good videos and info. Cheers
Thank you! And depending on your situation, your idea could be an excellent idea. I think 90% of the battle is making sure you use the tax deductions wisely.
Thanks for the video. @4:50 you mentioned you can use the RRSP tax deduction to make a lumpsum payment to your mortgage. But wouldn't that mean that you have to take money out of your RRSP and pay its taxes?
Nope! When you get a tax deduction it reduces the amount of tax you owe that year. So the money you receive from that would not come out of your RRSP but rather from CRA (usually in the form of a refund).
Very interesting videos! From what you say here, what i understand, for people having a high income tax % and are staying in Canada (ex. Quebec) for just some years, the best would be to do RRSP if they will be capable to leave the country at the beggining of a year ( when your income has not been much)?
Thank you! I’m not entirely sure what you mean by timing withdrawals for when you leave Canada, but you are definitely on the right track. The higher your tax bracket the more appealing RRSPs are because the tax deductions get larger. And when you have very low or no income years, it’s a great time to pull money out of your RRSP as the tax hit will be little to nothing.
Hey, I'm currently working full-time on a work permit in Canada and the company has offered me three retirement options: RPP, RRSP, and TFSA. As I may not live in Canada permanently and might leave after 2-3 years, I'm unsure which option would be best for my circumstances. Could you please guide me on which choice would be the most beneficial, considering my potential future move? Your advice would be much appreciated. Thank you!🙏
Yup, your retirement income and tax braket makes a huge difference. Then there's the pension amount, the size of your RRIF, when you want to draw your RRIF or TFSA. People say your biggest purchase in your life is a house. Nope, it's your retirement. You can sell your house but your retirement requires years of planning and generally, you can't go back. Listen to good advice but always be aware of your future needs. Siri and Alexa can't help you. Channels like this can.
I have a question about RRSP'S. I AM 65 AND WILL PROBABLY work till 71 where my RRSP will roll over to the RRIF. Will I be taxed as well like the rrsp when I take mo ey out,??. I am deciding between tfsa or rrsp.
I think financial experts such as yourself, need to focus more time on these videos on reinvesting tax refund vs spending it if investing in RRSP. The vast majority of clients get that tax refund and spend it. Regardless of income level, if you do that RRSP is by far the worst option to invest in!!
Theres really no debate tfsa are the way to go ...tax free? self explanitory...90;000 at 5.25% is 4,725 a year...tax free....D o it for 10 years...47,250 free money...
You’ve oversimplified. Using the tax bracket of 40% in the video you would have had to have made 150,000 gross to earn that 90,000 deposit. You’d have paid 60,000 in tax before even making the deposit Going with the RRSP you could have deposited all of that 150,000 and received a 60,000 tax refund. Invest that and by year 2 you have 210,000 invested plus your 5.25% giving you $221,025 in your RRSP or $94,725 if you’d gone with the TFSA.
@@kurtisf3366 First of all the 150,000 you made is taxed federal...cpp...ei...your left with mabe 105,000...sure deposit in a rrsp....taxed 500 for every 5000 takin out...Which is also considerd income..Therefore you get a t5...Non of that with a tfsa...
@@chrismatthews133 Do a bit of research or set up a spreadsheet. He does the math in the video in fact. The simple numbers are that if you’re in a higher tax bracket, and reinvest the returns, the RRSP out performs every time. Income tax is income tax, the RRSP tax deduction isn’t just against the federal portion, it’s also against the provincial. Yeah my simple example didn’t account for CPP or EI but those aren’t significant anyway. With an RRSP you have the power to put away pre-tax money, basically loaning it from the government with the promise you will give it back later. If you make compounding interest on that loan you will make so much more in your investments. Then if you plan your withdrawals properly you pull that money out at a lower tax bracket and benefit even further. Using your own simple example of 10% tax, it’s still better to pay $500 on $5000 in gains and be left with $4500 in your pocket than to have only had $3000 in gains with no taxes due.
Love the advice and delivery Rhys!
Thank you Arsalan! And by the way, it was great to meet you. Really enjoyed our meeting :)
The other thing to consider is your expected retirement income. If your tax bracket will not be going down in retirement a TFSA makes a lot of sense.
New scribe. Really like your videos! Keep them coming.
Thank you Reg! Will do :)
Also thank you for having the time to make us more aware of our money.
I just sub as per my brother's advise to follow you and learn from you.
Looking forward for your many insightful topics.
Thank you in advance.
Thank you, I'll have a look.
Completely agree and I have both but as I get closer to retirement, tax free income from a TFSA is super important for most people. Depending on your income, and lets face it, most Canadians have a much lower income in retirement, It could be the difference between qualifying for different programs such as GIS, for example. Grants for home updates etc. are also income tested. You could technically draw a 50k salary from your TFSA (yes, unlikely) and still qualify for full GIS and other programs. All that said, for a higher income worker, I like the idea of RSP contributions with the refund rolled into a TFSA. Its crucial that as part of your retirement plan, that the refund be rolled back into that plan and not spent on other frivolous things
Well said!
I stick with the TFSA and cashed out of the RRSP and invested it else where. Didn't like getting hit when the money was needed and moved. It's not a comfortable thing to go through. We want to move away from these hits the Government makes and just let our money grow and getting rid of the RRSP was, in my opinion, breaking away from Government Control, in that area and gives me more control and flexibility with my money.
I hear you. I do love the tax deductions from RRSPs but I really don’t like how it limits options.
New sub here. Ive been catching up and watching all your videos. Really great info. Thank you!
For this one, If one can max both accounts, whats the best type of stocks or ETFs for each?
And thank you! I’m a huge fan of ultra diversified ETF portfolios. Keeps the cost down, keeps it simple, and eliminates human error. I’ll be doing a vid on that shortly :)
Interesting video. Have an RRSP and TFSA for retirement but a different for shorter term goals like renos, vacations, etc. Don't see this aspect of using a TFSA covered much. You covered contributing to RRSP and reinvesting tax return into RRSP but what about strategy I use? Contribute to RRSP and contribute tax return to TFSA. Seems to me to be the better option but curious on if you thing that is true. Good videos and info. Cheers
Thank you! And depending on your situation, your idea could be an excellent idea. I think 90% of the battle is making sure you use the tax deductions wisely.
Thanks for the video. @4:50 you mentioned you can use the RRSP tax deduction to make a lumpsum payment to your mortgage. But wouldn't that mean that you have to take money out of your RRSP and pay its taxes?
Nope! When you get a tax deduction it reduces the amount of tax you owe that year. So the money you receive from that would not come out of your RRSP but rather from CRA (usually in the form of a refund).
Very interesting videos! From what you say here, what i understand, for people having a high income tax % and are staying in Canada (ex. Quebec) for just some years, the best would be to do RRSP if they will be capable to leave the country at the beggining of a year ( when your income has not been much)?
Thank you! I’m not entirely sure what you mean by timing withdrawals for when you leave Canada, but you are definitely on the right track. The higher your tax bracket the more appealing RRSPs are because the tax deductions get larger. And when you have very low or no income years, it’s a great time to pull money out of your RRSP as the tax hit will be little to nothing.
Hey, I'm currently working full-time on a work permit in Canada and the company has offered me three retirement options: RPP, RRSP, and TFSA. As I may not live in Canada permanently and might leave after 2-3 years, I'm unsure which option would be best for my circumstances. Could you please guide me on which choice would be the most beneficial, considering my potential future move? Your advice would be much appreciated. Thank you!🙏
TFSA if you plan to leave
Oh I have Subscribed. Would you advise a client to invest the RRSP tax refund into a TFSA instead of investing the refund back into the RRSP.?
100% depends on your situation. Sorry for the lame, politician answer, but it's true :)
@@wellbuiltwealth Love the TRUTH. That's why I'm here. Thx.
Yup, your retirement income and tax braket makes a huge difference. Then there's the pension amount, the size of your RRIF, when you want to draw your RRIF or TFSA. People say your biggest purchase in your life is a house. Nope, it's your retirement. You can sell your house but your retirement requires years of planning and generally, you can't go back. Listen to good advice but always be aware of your future needs. Siri and Alexa can't help you. Channels like this can.
I think i would do RRSP and the money or refunded amount will he invested to TFSA..
I have a question about RRSP'S. I AM 65 AND WILL PROBABLY work till 71 where my RRSP will roll over to the RRIF. Will I be taxed as well like the rrsp when I take mo ey out,??. I am deciding between tfsa or rrsp.
You bet. All withdrawals from a RRIF are taxable just like withdrawals from a RRSP. We have a full video on that topic if you like.
So basically, if I'm lower income, I should be investing with a TFSA compared to RRSP'S.
I think financial experts such as yourself, need to focus more time on these videos on reinvesting tax refund vs spending it if investing in RRSP. The vast majority of clients get that tax refund and spend it. Regardless of income level, if you do that RRSP is by far the worst option to invest in!!
You mean like I did in this video?
ruclips.net/video/6k6B6v2sXCk/видео.htmlsi=oE1bzgAfNTwphs-_
Yes…but even more time. I still don’t think people understand that even based on the small amount of time you spent on it… but great advice!!
Theres really no debate tfsa are the way to go ...tax free? self explanitory...90;000 at 5.25% is 4,725 a year...tax free....D o it for 10 years...47,250 free money...
You’ve oversimplified. Using the tax bracket of 40% in the video you would have had to have made 150,000 gross to earn that 90,000 deposit. You’d have paid 60,000 in tax before even making the deposit Going with the RRSP you could have deposited all of that 150,000 and received a 60,000 tax refund. Invest that and by year 2 you have 210,000 invested plus your 5.25% giving you $221,025 in your RRSP or $94,725 if you’d gone with the TFSA.
@@kurtisf3366 First of all the 150,000 you made is taxed federal...cpp...ei...your left with mabe 105,000...sure deposit in a rrsp....taxed 500 for every 5000 takin out...Which is also considerd income..Therefore you get a t5...Non of that with a tfsa...
@@chrismatthews133 Do a bit of research or set up a spreadsheet. He does the math in the video in fact. The simple numbers are that if you’re in a higher tax bracket, and reinvest the returns, the RRSP out performs every time. Income tax is income tax, the RRSP tax deduction isn’t just against the federal portion, it’s also against the provincial. Yeah my simple example didn’t account for CPP or EI but those aren’t significant anyway.
With an RRSP you have the power to put away pre-tax money, basically loaning it from the government with the promise you will give it back later. If you make compounding interest on that loan you will make so much more in your investments. Then if you plan your withdrawals properly you pull that money out at a lower tax bracket and benefit even further. Using your own simple example of 10% tax, it’s still better to pay $500 on $5000 in gains and be left with $4500 in your pocket than to have only had $3000 in gains with no taxes due.