The TFSA could be the right choice for you
Are you saving up to move out on your own, attend school abroad, or travel to an exotic location? Whatever you have in mind, the TFSA will help you grow your savings tax-free. Plus, you can withdraw as much as you like, whenever you like and for any reason2.
2 Subject to the terms and conditions applicable to the selected investments
The TFSA doesn’t replace an RRSP but it can help you optimize your retirement strategies. When it comes to choosing between an RRSP and a TFSA, various factors have to be taken into account.
For example, if you currently have a low tax rate (e.g., you are a student), it may be better to start by contributing to a TFSA. Then, when you enter a higher tax bracket, you can withdraw the amount invested in your TFSA and transfer it to an RRSP. You may even qualify for a tax refund.
Can't decide between an RRSP and a TFSA?
One thing to consider is what your income-tax rate might be when you are ready to withdraw those funds. But if you are able to contribute to both an RRSP and a TFSA, so much the better!
Here is an example:
If your RRSP deduction rate (tax refund expressed as a percentage) is the same as the tax rate in effect after you retire, contributing to a TFSA is comparable to saving in an RRSP.
These examples and assumptions illustrate the possible advantages of these two products under specific conditions.
The information provided here should not be considered advice or notification. Clients should always have their adviser or tax specialist confirm the benefits of the solutions described. This information does not create any legal or contractual obligation for National Bank or its subsidiaries.
* The data presented in these graphs is hypothetical. The calculations are provided for information purposes only to illustrate the advantages that could be gained from using a TFSA in identical conditions.