Before 2009, Canadians looking to place their money in a tax-efficient investment vehicle had one option: the registered retirement savings plan (RRSP). Since then, the introduction of the tax-free savings account (TFSA) has given financial advisors and investors plenty to mull over.
That’s because each vehicle has its own unique benefits and can help investors achieve their goals. Sometimes the products can be used in conjunction. There’s no shortage of ways for advisors and investors looking to make the most of RRSPs and TFSAs.
The following articles published on Globe Advisor this year focus on various strategies for RRSPs and TFSAs:
It’s been a little more than a decade since the former federal Conservative government introduced the TFSA as a financial planning tool to help Canadians increase their net worth. However, recent research shows the TFSA has been used more as a piggy bank than a tax-efficient investment vehicle – and advisors believe this is a missed opportunity for investors.
Investing in Canadian dividend stocks can be a wise strategy to grow investors’ holdings in a TFSA for the many people who remain reluctant about embracing equities within the structure. Dividend income and capital gains are free from the Canada Revenue Agency’s clutches when withdrawn from a TFSA. And as regular dividend payouts can also be comforting during volatile markets, three portfolio managers provided their top picks among Canadian dividend-payers for a TFSA.
With the RRSP contribution deadline approaching in the new year, many Canadians will be looking forward to a hefty tax refund in the spring. But for disciplined investors who are prepared to forgo the gratification of immediate cash, there’s a way to make better use of those refunds. Namely, put them in a TFSA, in which the gains on investments are never taxed.
‘Tis the season – for RRSP contributions. The new year is a busy time for advisors as they work with clients to make last-minute contributions to their RRSPs. Yet, the timing also couldn’t be better to get clients focused on their overall retirement plan – a discussion that may involve the TFSA.
Selling stocks at a loss before year-end provides savvy investors the opportunity to offset taxes on capital gains – and that strategy can be particularly valuable for those who have contribution space available in their RRSP and TFSA.
Picking winning stocks is never a slam-dunk, but equity investment funds can be a less risky way for investors to grow their money within a TFSA. By not having some exposure to equities inside a TFSA, investors miss out on potential capital gains and Canadian dividends that can be withdrawn on a tax-free basis. Three fund experts give their top equity mutual fund and ETF picks.
Building a nest egg with ETFs is growing in popularity, but one size may not fit all. When choosing ETFs for an RRSP, investors need to be aware of their risk tolerance and time left until their golden years. Paying attention to fees also matters because costs can eat away at returns. With the RRSP contribution deadline looming, three ETF experts provided their top picks to suit millennial, Generation X and baby boomer investors.
The TFSA is better than ever now that its annual maximum contribution has increased by $6,000 this year. But while the TFSA’s key advantage is tax-free growth and withdrawals, this account is also flexible. Investors can use it for short- or long-term purposes, and they have plenty of investing options, which can help them cope with a challenging, volatile market.
The RRSP continues to be the big dog in the financial-planning world. But while the RRSP provides a solid bang for the investment buck for most Canadians, many investors misuse this venerable financial vehicle. So, what do Canadians get wrong when it comes to RRSPs – and how can their advisors help them make it right?
New incentives for home buyers introduced in this year’s federal budget – namely, an interest-free mortgage loan in exchange for shared equity ownership and higher thresholds for interest-free borrowing from RRSPs – are attractive to millennials and couples seeking to buy their first home, but who face challenges coming up with sufficient funds for a down payment. However, advisors are warning some clients to think carefully before they take the plunge.