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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: jordan33 on July 13, 2016, 09:21:20 AM

Title: rrsp vs tfsa
Post by: jordan33 on July 13, 2016, 09:21:20 AM

I am hoping you wonderful folks can provide some advice on RRSPs and TFSAs in Canada.

I have heard that if your income is relatively low, that it doesn't make a lot of sense to have an RRSP because you won't qualify for GIS. I don't really understand this but if someone could explain it better for me?

So my income is around $40,000 - I didn't start working f/t until my 30s and will likely work at a similar salary until I am 60-ish. Does it make sense for me to start an RRSP or a TFSA or both?

Thanks.

Title: Re: rrsp vs tfsa
Post by: swick on July 13, 2016, 09:55:53 AM

RRSPs are great if you have a higher income and can get the tax benefit. You aren't making a huge salary right now, do you expect your salary to rise?  If so I would max out your TFSA now and Open an RRSP when you are making more and can take more advantage of the tax benefit.

The exception to this is if you have an RRSP matching program at work, you always want to take advantage of that.

Title: Re: rrsp vs tfsa
Post by: Prairie Stash on July 14, 2016, 01:57:04 PM

http://www.taxtips.ca/tfsa/tfsavsrrsp.htm

TaxTips is an older website (2002-present) that still updates regularly and is a great source of info in Canada. I linked the RRSP/TFSA arguments, they explain everything very well.

Short Answer; at $40k income go with TFSA.