Story: About financial
Sometime in 2021, I visited TD Bank for making a new business credit card for Facebook ads. I talked with a staff, not a teller. She helped me to apply for a new business credit card(it’s accepted) and explained about an investment. I just knew several types of investments, startup, real estate, stock, FX, etc. You may hear NFT or cryptocurrencies, bitcoin, Ethereum, or dogecoin? I don’t think I am eligible for investment, but anyway she explained.
She mentioned RSP(RRSP) and TFSA. I don’t understand them, but I heard them a while ago. I don’t mind paying taxes to contribute the society, but she told me that I can save money.
I could understand what she said, but I cannot remember how it works. I would like to write a blog about RSP(RRSP) and TFSA.
TFSA vs. RRSP: What’s the Difference?
RRSP
– For retirement
– After you start earning income from employment
– 18% of your earned income reported on your 2020 tax return or $27,830, whichever is lower (2021)
– Carried forward
– Withdrawals are taxable, the contribution room is lost
– Tax-deductible
– the calendar year in which you turn 71
– Contribute directly to a spousal RRSP
TFSA
– For any purpose.
– 18 or 19 based on your province
– $6,000 (2022)
– Carried forward
– Withdrawals are taxable, added back to your contribution room in the following year
– not tax-deductible
– No upper age limit
– No spousal TFSA
The difference between TFSAs and RSPs
This chart is relatively easy to compare between TFSA and RSP.
Should you use the TFSA or RRSP?? | Investing For BEGINNERS in Canada
©Brandon Beavis Investing
– TFSA: short term, flexible, no tax break
– RRSP: long term, tax break
Sounds like I don’t have much benefit to use TTSA. I have 2 choices, don’t both or RRSP. I don’t mind paying tax to Canada. I don’t have a mind avoiding paying tax. I am not rich and my contribution to this country is tiny, but it’s my duty. If you think like me, I don’t know I need to use TTSA and RRSP.
Preparing for retirement also may be important though we never know how long we can live.
TFSA Explained For BEGINNERS (EVERYTHING YOU NEED TO KNOW)
©Brandon Beavis Investing
– TFSA = Tax-Free Saving Account
– TFSA = Tax-sheltered Plan
– Contribute after-tax
– No tax-deductible
– Flexible
This is easy to remember, Tax-Free Saving Account. According to the video, TFSA has started in 2009. I found some benefits, tax-free investment income, easy withdrawal process, TFSA contribution room is not determined by income, etc, but I don’t know the purpose or reason why it has started.
I like TFSA flexibility though I don’t withdraw once I deposit(invest) money. I don’t use any money for TFSA or RRSP if I can expect a necessity of money near future, house, condo, car, child, etc.
Canada.ca: Tax-Free Savings Account (TFSA), Guide for Individuals
RRSP or TFSA? Is It Better To Contribute To TFSA or RRSP?
©The Independent Dollar
This video makes me hesitate to access both TFSA or RRSP. Because I don’t have to think about it. Just depositing money at a bank doesn’t have much interest these days, but at least does not decrease monay.
4 Reasons To Avoid RRSPs – RRSP vs TFSA vs Non Registered Account
©The Independent Dollar
I, as a PR states, don’t know where I am in the future. After all, I cannot use RRSP.
Conclusion: Let’s reach to $100K
I could generally understand what TFSA/RRSP is. I don’t much consider about it. Instead of thinking about investment, I focus on my work in daily life.
During the conversation with TD staff, she mentioned the financial planner. Once I reached $100K, I can consider them, she said. I don’t know that I really use the service, but I would like to meet a qualification in 2 years.
Reference:
Canada.ca: RRSPs and related plans
Canada.ca: Tax-Free Savings Account (TFSA), Guide for Individuals
