As an investor, figuring out where to put your money is one of the biggest decisions you’ll make.

Two popular options are the Registered Retirement Savings Plan (RRSP) and the Tax-Free Savings Account (TFSA) – but how do you know which one is the right choice? Let’s break them down and find out!

RRSPs are a great place to put retirement savings because they are tax deferred. You receive a tax refund when you contribute to an RRSP, and then you are taxed at your marginal tax-rate at the time of withdrawal.

On the other hand, if you’re saving for a dream vacation, you may be better to go with a TFSA. TFSA contributions are made with your after-tax income, but withdrawals are completely tax-free.

But do you really have to choose? Most people have a combination of short, medium and long-term savings goals.

For this reason, it may be useful to have both a TFSA and RRSP – both can be an important part of your investment strategy.


By placing your short, medium and long-term investments in a TFSA, and long-term investments in an RRSP, you are giving yourself options. Want to book that vacation? No problem! But take those funds from your TFSA and leave the RRSP alone.

If something unexpected happens and you need money from your investments, the last thing you want is a big tax bill from withdrawing your RRSPs early. You also have the flexibility to move money from the TFSA into your RRSP and receive a reduction in taxes, which, let’s face it, is never a bad thing!

It can seem daunting when you’re deciding how to invest your hard-earned funds but with a little planning, you can make an informed decision that you feel great about…and go on vacation earlier than you think!