Why People Are Still Getting The TFSA vs. RRSP Debate Wrong (from FinancialUproar.com)

Here’s a great article from 2014 (but it’s still as relevant today), by Nelson over at his great blog: FinancialUproar.com.
Make sure you visit it…

In this article he explains a few differences , and pros and cons of RRSPs and TFSAs…

RRSPs aren’t flexible like TFSAs. They aren’t taxed while in a registered account, but can’t be withdrawn without a penalty either. Unless you’re withdrawing the money to put down on a house, you’re going to pay tax on it. And even then, you’ve only got 15 years to pay yourself back. And, of course, they’re fully taxable once you start taking out the cash. You can defer it to age 71, but after that yo ass is forced to take out that sweet retirement scratch, and pay tax on it too.

That last point is a big reason why I see all the people recommend the TFSA route over RRSPs. You can let those bad boys compound until you’re 187 (in theory, anyway, your organs may beg to differ), choosing to never withdraw. I always thought part of the the point of retirement savings was to spend the money at some point, but maybe I’m drunk.

But the fact remains that if you go that route, you’ll end up with less money. Because there’s less to compound in the first place.

He then does a simple math calculation to see which account would have more money after compounding for 40 years…

…to read the full article, please click here to go to this article on FinancialUproar.com, and look for other great articles!

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