You may have been asked the question, RRSP or TFSA, and left wondering what each acronym is and what that means for you and building your savings. So, what’s the difference between RRSP and TFSA?

A RRSP is a Registered Retirement Savings Plan, and as the name suggests, its primary purpose is to help you save for retirement. Any money contributed now helps you reduce your current income, which in turn lowers the amount of tax you pay. While in the plan, your investment grows tax deferred until you take it out, which is generally at retirement, and often at a lower tax level than when it was contributed.

A TFSA is a Tax-Free Savings Account, and this type of investment is a great way to help you save for any future need. You can use it for a home, renovations, a child’s wedding, retirement, an emergency fund, really anything. While you don’t receive any immediate tax reduction like you would in a RRSP, any growth of the account is not taxed.

It’s important to note that there are benefits to both TFSAs and RRSPs, so the challenge is deciding what works for you. Here are some scenarios to consider.

  • A RRSP is intended for long-term retirement savings. So, if you would like easy and frequent access to your money, a TFSA may be the better option!
  • If one of your goals is to buy a home, and you qualify as a first-time home buyer, you could take advantage of using your RRSP early to help you with this purchase.
  • If you currently have little to no income and taxes are not a concern, a TFSA may be the better option.
  • Both RRSPs and TFSAs have contribution limits, which may also impact your decision.
  • Of course, there are situations where both a RRSP and TFSA might make sense.

As you can see, there really is no simple answer as to which is better. In order to make the best financial decision for your own unique situation, speak with a member of Kindred’s Wealth and Investment Team today. You can ask us anything!


*Mutual funds are offered through Qtrade Asset Management (a tradename of Credential Asset Management Inc). Mutual funds, other securities and securities related financial planning services are offered through Qtrade Advisor, a division of Credential Qtrade Securities Inc.

Qtrade Asset Management, Qtrade Advisor and Northwest & Ethical Investments L.P. are all wholly owned subsidiaries of Aviso Wealth Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Unless otherwise stated, cash balances, mutual funds and other securities are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer that insures deposits in credit unions. Mutual funds and other securities are not guaranteed, their values change frequently and past performance may not be repeated.

Paul Arsenault

Paul Arsenault, CFP®, PFP®, RIS, CKA®

Director, Wealth and Investment Branch Compliance Manager / Qtrade Asset Management Inc. Paul has a wealth of experience helping members achieve their goals as a CERTIFIED FINANCIAL PLANNER® professional. He coaches Kindred’s Financial Planning Team and acts as our compliance manager for Qtrade Asset Management Inc. In addition, Paul is passionate about sharing his knowledge around RDSPs with members and organizations.