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In Canada, we have some amazing opportunities to invest in tax-advantaged accounts. The choice can be difficult, so let's simplify it:

Generally, RRSP is optimally used in your higher income earning years. Any year when your income is greater than or equal to your expected income in retirement is a good year to take advantage of an RRSP. In years when your income is lower than your expected retirement income, TFSA is your first choice.

Here's the Principle


If you deposit funds into an RRSP in a year when your marginal income tax rate is the same as your expected marginal income tax rate in retirement, the net after-tax result of your investment when comparing the same underlying fund is the exact same as if you invested inside of a TFSA.

If you deposit funds into an RRSP in a year when your marginal income tax rate is lower than your expected marginal income tax rate in retirement, the net after-tax result of your investment, when comparing the same underlying fund, is not as good as if you invested inside of a TFSA.

If you deposit funds into an RRSP in a year when your marginal income tax rate is greater than your expected marginal income tax rate in retirement, the net after-tax result of your investment, when comparing the same underlying fund, is better than if you invested inside of a TFSA.​

This is a generalization and doesn't always apply to every situation. If you are planning to take time off work, or start a business and expect to live on savings for a while, an RRSP can be used to spread your tax burden through the years of decreased income. Conduct a complete financial analysis for more accurate results. The net result will be a lower tax bill.


Series T Funds

When your RRSP and TFSA accounts are optimized, Series T funds can be an attractive option depending on your situation. Dividends and Interest are re-invested, offsetting your cost basis and deferring tax until disposition. 

In English, you pay less tax and pay it later.

TFSA or RRSP