Since 2009 this has become one of the most debated personal finance discussions in Canada. To be honest, i believe it is one that you should not spend too much time worrying about. The way i see it, if you are saving money, that is the most important thing. However, being that i set out to answer this question in this post and it is as follows:
Low Income (<50,000) - TFSA
High Income (>50,000) - RRSP
For some of you, a TFSA might be all you need. If you are young, say you are 30 and you contribute the max amount to your TFSA, then over 30 years you will be able to save 200,000 to 300,000 before retirement. Combine this with OAS and CPP and you should have no problem earning $3000.00 in retirement. Not a luxurious one, but at least you know you can get by.
Everyday I work is one day closer to not having to work. This means that a dollar earned only matters if a percentage of it is saved. Wealth means freedom and everyday should get you one step closer to the wealth you need to be free.
Another year is in the books and a new year is beginning, which means that as Canadian’s you can contribute an additional $5,500 to your TFSA’s. For those of you unfamiliar with this product, it is a registered investment account that can be opened at most Canadian banks which allows you to earn dividends, interest and capital gains without paying taxes. Don’t miss out on this opportunity to grow your wealth. Remember, any gains in this account can be used for further gains as long as the funds remain in your TFSA. That might not feel like a big deal, but 20 or 30 years from now it can be significant. Let the power of compounding work for you.
Since 2009, Canadian have been able to contribute $5,000 per year to TFSA accounts (this amount was increased in 2013 to $5,500). And you can contribute for previous years. Thus as of this year, $32,000 can be set aside for this account.
Welcoming all to my new blog that will guide you through my journey to retiring at 40. This blog will take personal finance to a new level by focusing what I have done and will be doing to making retiring at 40 possible.