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Thread: RRSP or TFSA. Where to put more $$

  1. #61
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    Bump this. Since finishing mortgage last year, got like 50k sitting in my regular savings account doing nothing. First year of real savings what to do with it?
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    Keep standard emergency fund, max out TFSA, and spend the rest on hookers and blow if you don't need more stonks.

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    Personally,

    Max tfsa then max rrsp

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    Put in RRSP and put tax refund in TFSA.
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    I'd be lying if I said I didn't disagree.

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    TFSA vs. RRSP largely depends on you current income relative to your expected future income. If you think you're going to make a higher income in the future then the conventional wisdom says TFSA now then RRSP later. Lots of other factors at play that could tilt the recommendation one way or the other. Then once you chose the type of account you still have to decide on how to invest the money and that in and of itself is a whole other conversation.
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    As others have said, TFSA first but don't just get a bank savings TFSA, set it up so you can invest it in a indexed fund or ETF so it actually makes you money rather than the 1% a bank will give. There's a few different options you can read through the investment long term thread. Examples (in no particular order) are QQQ (S&P500 index), VGRO (Vanguard growth ETF), VTI (Vanguard total stock market etf), or ARKK (ARK Innovation ETF). Decent idea to split things across a few funds too.

    https://forums.beyond.ca/threads/255...stments-Thread

    TFSA is always first because you can access the money if something comes up, RRSP you have to pay penalties to withdraw whereas TFSA can be pulled out and the next calendar year put back in. After TFSA then do your RRSP and then just do regular investments without any tax sheltering. You can still invest in the same funds above, you'll just pay tax on the gains when you go to retire or pull it out.
    Nolan

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    RRSPs are basically betting on the future having the same tax rates... not sure how much I trust them, but they are obviously a tool that you should be using to some extent. Now the TFSA... that's free money. Make sure you have it maxed out and setup for investments, do some research if you don't want to be watching it like a hawk all the time you can find some fairly safe ETFs to park it in, all gains are tax free (but you can't claim losses either)

    I like Extraslow's idea it's pretty clever, if your RRSP room will allow that much you could end up with a pretty big tax return
    Last edited by tcon; 02-25-2021 at 01:04 AM.

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    Quote Originally Posted by tcon View Post
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    I like Extraslow's idea it's pretty clever, if your RRSP room will allow that much you could end up with a pretty big tax return
    I always like getting 36% of my investment back in cash 30-90 days later. I think that's a pretty good "ROI" even if I end up paying tax on the money in 20-30 years. Your marginal tax rate may vary.
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    Speaking of “bank savings” TFSA’s.

    It should be a jailable offence for banks to openly try and convince their clients to open cash TFSA’s with them. As far as I’m concerned that is straight up taking advantage of the financially illiterate and should be criminal. It’s also ridiculously common.
    Originally posted by Thales of Miletus

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    I make regular contributions to my RRSP and then use the tax refund to max the TFSA each year. Using this tax table will help guide your decision - https://www.taxtips.ca/taxrates/ab.htm

    Personally if I was making <98,040 I'd only contribute to the TFSA until you max it. More than that and I'd contribute to the RRSP to an amount that wouldn't drop your taxable income below that 98k threshold. Where you are in your career should have an impact too. If you're early in your career making say 65k but you have a trajectory to be making 150k in the next 10 years, then it would make sense to not use that RRSP room so you can get a bigger tax refund later. In that case, directing everything to the TFSA until you're in a higher bracket would be the right play.

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    Quote Originally Posted by killramos View Post
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    Speaking of “bank savings” TFSA’s.

    It should be a jailable offence for banks to openly try and convince their clients to open cash TFSA’s with them. As far as I’m concerned that is straight up taking advantage of the financially illiterate and should be criminal. It’s also ridiculously common.
    Retirees ain't got the diamond hands to hold anything but cash. Even if return doesn't remotely follow inflation and they don't understand the concept of QE.

    Heck, even banks have stopped hoarding cash due to QE policy.

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    Quote Originally Posted by Xtrema View Post
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    Retirees ain't got the diamond hands to hold anything but cash. Even if return doesn't remotely follow inflation and they don't understand the concept of QE.
    I’ve seen examples of banks pressuring people to open TFSA’s in accounts that weren’t even interest bearing.

    Again. This is stupidly common.

    I have very little sympathy for retail banking. In a lot of ways they are worse than payday lenders.
    Originally posted by Thales of Miletus

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    At the very worst you could open a TFSA with EQ Bank and get 2.30% without leaving your couch.
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    Quote Originally Posted by killramos View Post
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    I have very little sympathy for retail banking. In a lot of ways they are worse than payday lenders.
    At least with a payday lender you KNOW you're getting screwed, too many people just assume the banks are doing right by their customers.
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    As a rule I just don’t engage when friends like to talk about their “financial advisors” at their parents community bank branch and all the great mutual funds they have their money in.

    I just pour another beer.

    I had to get in a fight with the CRA a few years back because RBC advised my brother to open a non interest bearing TFSA with them that they subsequently advised him to overcontributed to. CRA wanted to charge him penalties for overcontributing despite the fact that it was RBC who fucked up and that he never had a chance of actually making any tax free gains because of the account he had with them.

    Fuck retail banking.
    Last edited by killramos; 02-25-2021 at 11:36 AM.
    Originally posted by Thales of Miletus

    If you think I have been trying to present myself as intellectually superior, then you truly are a dimwit.
    Originally posted by Toma
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    Contribute to RRSP to achieve max employer contribution, the remainder to TFSA (to achieve 10% of income into savings). Then Max RESP to government match ($209 per kid, per month), then mortgage.

    All this after no debt (excluding mortgage). #DaveRamsay

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    Quote Originally Posted by SkiBum5.0 View Post
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    Contribute to RRSP to achieve max employer contribution, the remainder to TFSA (to achieve 10% of income into savings). Then Max RESP to government match ($209 per kid, per month), then mortgage.

    All this after no debt (excluding mortgage). #DaveRamsay
    I have no dept, Mortage and vehicle paid off, playing around with tax return if put 45k in rrsp it brings my refund up by 14k.
    I have an investing TFSA but the money just been sitting for a year as i don't know what to invest in. Household income around 190 last year me at 110. probably won't much more than that in the future.
    Last edited by blairtruck; 02-25-2021 at 02:23 PM.
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    So your options are
    1) Put 45k in TFSA
    or
    2) Put 45k in RRSP AND 14K in TFSA?

    I dunno, that math is easy for me no matter what your opinion is on taxes.
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    Quote Originally Posted by blairtruck View Post
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    I have no dept, Mortage and vehicle paid off, playing around with tax return if put 45k in rrsp it brings my refund up by 14k.
    I have an investing TFSA but the money just been sitting for a year as i don't know what to invest in. Household income around 190 last year me at 110. probably won't much more than that in the future.
    When do you think you want to use this money? Retirement? Or do you want to buy any expensive toys or a bigger house at some point soon?

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    Quote Originally Posted by ExtraSlow View Post
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    So your options are
    1) Put 45k in TFSA
    or
    2) Put 45k in RRSP AND 14K in TFSA?

    I dunno, that math is easy for me no matter what your opinion is on taxes.
    You're only considering tax at inception but also have to be mindful of tax efficiency on redemption.

    What happens if those investments grow to $450K and you need to withdraw?

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