RRSP or TFSA: what to prioritize?

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Few people manage to maximize all of their RRSP contributions and TFSAS. In fact, 51 % of Quebecers would contribute not at all neither to the one nor to the other of these valuable tools of performance.

Even if you’re not part of the statistics, and that you have managed to save this year, make an informed choice between the two programs can be difficult, not to mention that each institution will probably try to move ahead with its products fetishes. So here are 6 scenarios to help you decide where to invest.


As its name indicates, the Registered Retirement Savings plan helps you save for retirement. The RRSP provides a deduction on your income from the previous year, which will be reported at the time to withdraw your savings. We therefore anticipate that your tax bracket is higher today than at the time of your retirement. The higher your present income is, the higher it will be beneficial to contribute to your RRSP in the first place.

You are planning to soon become a homeowner for the first time? It may be interesting to finance the purchase with a RAP maximum of $ 25,000. Make sure to achieve this balance in your RRSP for at least 90 days prior to the scheduled withdrawal in order to qualify. You can then withdraw the money while enjoying a tax deduction on the RRSP invested this year.

You plan to return to school? The image of the HBP, the LLP allows you to withdraw amounts from your RRSP to finance your studies. You will then have 10 years to repay the withdrawal without penalty.

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Your earnings are not particularly high this year, but are required to increase in time? Invest in your TFSA will allow you to enjoy a low tax bracket today, while withdrawing your profits to 100 % the day you will be more taxed.

You don’t think spending all your savings before your death? Keep in mind that a TFSA can be passed on without any tax implications for the heir. Leave the money to his death thus represents a rare legacy non-taxable.

You will apply for a loan for a major project such as a renovation or starting a business? The TFSA can be used as collateral to this loan. The savings may also be withdrawn at any time to help you finance your projects without penalty.

For the two products evaluated, remember that unused contributions can be in the following years. So don’t hesitate to catch it when your financial situation allows you to save more, to the receipt of a bonus or the sale of real estate, for example!

Bonus : do You have children? Remember to start by maximizing your RESP (registered education savings, for which the provincial and federal governments will improve your savings of 35 %. Hard to beat such a gift with the return on your RRSP and TFSA!

Beyond the structural benefits of these different products, each financial situation remains unique. It is important to consult with a financial advisor who will take the time to evaluate your situation and your goals in the short and long term in order to help you allocate your savings in the way most advantageous for YOU.

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As with any project, a retirement, it has to be planned!