Canada offers two powerful wealth accumulation accounts: the Registered Retirement Savings Plan (RRSP) and the Tax-Free Savings Account (TFSA). Reaching financial freedom sooner requires allocating contributions based on your current income bracket.
Key Account Characteristics
- RRSP (Tax-Deferred): Contributions are tax-deductible, providing an immediate tax refund. Reinvesting this refund is critical to matching TFSA growth. Withdrawals are taxed as regular income.
- TFSA (Tax-Free): Contributions are made with after-tax money, but all investment growth, dividends, and future withdrawals are entirely tax-free.
RRSP vs TFSA Decision Tool
Immediate Tax Refund (RRSP):
C$2,580
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