Feel good about both options.

TFSA or RRSP? Why choose?

Combine your investment options for greater flexibility

As an investor, figuring out where to put your money is one of the biggest decisions you’ll make. Two popular options are the Registered Retirement Savings Plan (RRSP) and the Tax Free Savings Account (TFSA).

RRSPs are a great place to put retirement savings because they are tax deferred. You receive a tax refund when you contribute to an RRSP, and then you are taxed at your marginal tax-rate at the time of withdrawal. The idea is that when you retire your income will be lower than when you are working, therefore when you withdraw you will have a lower tax burden.

On the other hand, if you’re saving for a new car or a dream vacation, you may be better served with a TFSA. TFSA contributions are not tax-deductible, but withdrawals are completely tax-free.

Invest in short, medium and long-term savings

But do you really have to choose? Most people have a combination of short, medium and long-term savings goals. For this reason, it may be useful to have both a TFSA and RRSP.

Jill Diemer, a Certified Financial Planner from Prospera Credit Union, is an advocate of holding both a TFSA and RRSP. “Both accounts can be an important part of your investment strategy.”

By placing your short, medium and long-term investments in a TFSA, you’re giving yourself options. If something unexpected happens and you need money from your investments, the last thing you want is a big tax bill from withdrawing your RRSPs early. That is where your TFSA investments come in handy.

On the other hand, you also have the flexibility to move money out of the TFSA and into your RRSP and receive a reduction in taxes. “With some goal setting and planning, a certified planner can make sure you’re taking full advantage of both options,” Diemer says.

Convertible term deposit offers flexible option

Speaking of flexible options, what could be better than a convertible term deposit? Prospera Credit Union is offering a 30 month term at 2.5%, with the option to rewrite if rates go up. This investment provides peace of mind that if rates change, you’re still getting great value for money.

***

A credit union serving British Columbia for more than 70 years, Prospera is proud to serve its 63,000 members from locations in the Lower Mainland, Fraser Valley and Okanagan.

Just Posted

Number of Kelowna-linked COVID-19 cases grows to 159

Interior Health reported four new cases region-wide on Friday, 18 remain active

Okanagan, Creston cherry and apple farms in need of workers

The worker shortage is due to the COVID-19 restrictions on international travel

New team focuses on troublesome Kelowna properties

Recently, a property owner was handed six tickets amounting to over $2,500

Police watchdog deems Kelowna RCMP not responsible for man’s death

The man spoke to police after a car crash before leaving on foot; he was found dead six hours later

Central Okanagan adds 3,600 jobs in July: Statistics Canada

The region’s unemployment rate decreased by 0.2 percentage points to 10 per cent in July

53 new COVID-19 cases, no new deaths cap off week of high infection rates in B.C.

Roughly 1,500 people are self-isolating because they either have COVID-19 or have been exposed to it

VIDEO: U.S. Air Force pilot does fly-by for B.C. son amid COVID border separation

Sky-high father-son visit plays out over White Rock Pier

3 Vancouver police officers test positive for COVID after responding to large party

Union president says other officers are self-isolating due to possible exposure

New mothers with COVID-19 should still breastfeed: Canada’s top doctor

Dr. Theresa Tam made the recommendation during World Breastfeeding Awareness Week

Collapse of Nunavut ice shelf ‘like losing a good friend:’ glaciologist

The ice shelf on the northwestern edge of Ellesmere Island has shrunk 43 per cent

‘It’s just my job’: Off-duty Peachland paramedic saves choking girl downtown Penticton

Family vacationing in Penticton assisted by off-duty paramedic, who helps save 13-year-old

Vandals target North Okanagan camper

COVID-19 ‘No camping’ warnings sprayed on local camper

Pup stolen from Vernon temporary shelter

Nicola Sanders hopes to spread the word to get Nala home to her son, the rightful owner

Evacuation alert for 43 homes near Dry Lake fire rescinded

Fire status changed to Under Control, crews remain on site patrolling and extinguishing hot spots

Most Read