Savings And Investment Planning
TFSA (Tax-Free Savings Account)
A TFSA is a registered investment account designed to help Canadians save money while holding qualified investments. More than just a typical savings account, a TFSA can hold a variety of different investment types, such as mutual funds, segregated funds, insurance GICs, and more.
Any income earned within a TFSA, including interest, dividends, and capital gains, is tax-free. What’s more, you won’t have to pay tax on any withdrawals.
RRSP (Registered Retirement Savings Plan)
A Registered Retirement Savings Plan (RRSP) is a type of savings account. It helps Canadians save for their retirement. One of the key advantages of an RRSP is that you may claim a deduction for your contribution. RRSPs can also help people fund their education and buy their first home.
RESP (Registered Education Savings Plan)
RESP is a tax-deferred account to help you save for a child’s or grandchild’s post-secondary education. Anyone can open a RESP and contribute money at any time, up to a lifetime total of $50,000 per child. Contributions aren’t tax deductible, but any investment income earned within the plan will be taxed only when it’s withdrawn. If that income is withdrawn to pay for the child’s education it will be taxed to the child, not to the contributor.
Through the Canada Education Savings Grant (CESG), the federal government will match up to 20% of your RESP contributions up to a maximum of $500 per child, per year, to a total of $7,200 per beneficiary, until they turn 17.
RDSP (Registered Disability Savings Plan)
RDSP is a savings plan intended to help an individual who is approved to receive the disability tax credit (DTC) to save for their long-term financial security.
Contributions to an RDSP can be made until the end of the year when the beneficiary turns 59. Contributions that are withdrawn are not included as income to the beneficiary when paid out of an RDSP. Funds can be withdrawn for any purpose that benefits the person with the disability. Plus, family and friends can contribute to the plan with the written consent of the plan holder.
The Federal Government will match your contributions (limits apply) up to $70,000 in Canada Disability Savings Grants and low-income families may qualify for additional help of up to $20,000 in Canada Disability Savings Bonds.
FHSA (First Home Savings Account)
The FHSA is a new registered plan that can help you save for your first home tax-free. If you have not owned a home where you lived this year or at any time in the preceding four calendar years, you may be eligible to open an FHSA.
You can use it to save up to $40,000 for your first home, contribute tax-free for up to 15 years, and unused contribution rooms can be carried over to the next year, up to a maximum of $8,000.
Segregated Fund
Segregated funds are large pools of money invested in stocks, bonds, or other securities. These contracts also offer guarantees contract.
It protects the value of the premiums you paid on the contract maturity date and on death. The guarantees are 75% to 100% of your premiums (reduced for any withdrawals). Some segregated fund contracts also offer income guarantees.
Annuity
An annuity protects you from the risk of outliving your money and helps to cover basic expenses in retirement. The annuity pays you an income for life or as long as the annuity contract specifies. Your income will be secure from both market and interest rate risks – and, if you buy your annuity with non-registered savings, you could also benefit from tax savings.