Tuesday, March 03, 2015
By Mya DeBrouwer, Digital Marketing Coordinator
Your Neighbourhood Credit Union
While the RRSP deadline for the 2014 tax year is now over, it makes sense to consider contributing monthly installments to your retirement savings plan. There is an advantage to making regular contributions, since your money goes to work sooner and can produce higher returns. Also, by contributing regularly many people find they ultimately end up putting more money aside. A year-round strategy with monthly installments are usually better able to withstand market volatility, and for most people is a less stressful way to get the most from their investment portfolio.
There has been much discussion in the media about the differences and benefits of RRSPs and TFSAs (Tax Free Savings Account). Both TFSAs and RRSPs offer tax advantages which can help you to reach your savings goals. If you are able to, a good strategy is to contribute as much as you can to both. If you have to choose one over the other, make sure you understand how they differ – then make your choice based on your own financial and tax situation. This simple chart shows you how they stack up.
So what is the best option? Actually, there is no right or wrong answer. As the chart shows, each option has benefits, and the best option for you will depend on a number of factors. If you have questions, contact us at Your Neighbourhood Credit Union, where we can put you in touch with your local YNCU financial representative.