If you’re wondering which is better, a Tax-Free Savings Account or a Registered Retirement Savings Plan, the answer might be “Both!” Both are government plans to encourage Canadians to save, and both cover a wide range of investments such as cash, term deposits, and stocks. Most importantly of all, interest on both is non-taxable.

Here’s a quick summary of the important benefits – and differences:

•  You contribute pre-income tax dollars to an RRSP.
•  Contribution limit is individual, depending on your income, and as stated on your notification from Revenue Canada.
•  Intended to be long term, as in saving for retirement, and is also more difficult to withdraw.
•  You pay tax on the money you withdraw.
•  Cannot contribute past the age of 71.

•  The money/investments you initially contribute to a TFSA are after-tax (e.g., the “net income” on your paycheck.)
•  Contribution limit for 2012 is $5,500.
•   Easily accessible at any time, and can be a great way to save for things like a vacation.
•  The money you withdraw, including investment growth, is tax free.
• No age restrictions.

At Luminus Financial, we can help you decide what is best. For example, if you have used up this year’s contribution room in your RRSP, you can still invest in something such as a term deposit and hold it inside your TFSA.

At Luminus Financial, we’ll help you look at your personal financial picturand your goals, then help you decide how best to use both an RRSP and a TFSA to your full advantage!

If you’re not sure what product is best, but need to make an RRSP contribution today, why not try one of our new L-Series Term Deposits?  With the L-Series Term Deposits, which are RRSP eligible, you have up to 90 days to make a change into any of the other L-Series Term Deposits ranging from 12 to 60 months.


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