Canadians have a wonderful assortment of investment account options to help them save and grow their money. The suite of options is way better than what existed 30 years ago (TFSA was added in 2009). And the suite of options is about to get even better in 2023 with the proposed First Home Savings Account.

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It is important to learn what types of savings plans are available so you are able to use them to your advantage. All of these plans allow your investments to compound tax-free and that is a big deal. Taxes are your biggest single expense item so anything you can do to reduce taxes will leave more money for you. This becomes especially meaningful over 20 or 30 years.

 

1. When you turn 18 you will be eligible to set up a TFSA.

2. When you start earning real money (and start paying real taxes) you can set up an RRSP.

3. FHSA (when it becomes available) might be the best of the bunch as it combines the best of TFSA and RRSP

4. When you have kids, an RESP can be set up to help pay post secondary education costs.

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How do you set up one of these savings accounts? 

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1. set up an investment account (you need to be 19)

   • ​​consider the self directed option

2. choose the registered option

3. check the box for the type of savings account you want it to be:​

   • ​​TFSA

   • RRSP

   • FHSA - coming later in 2023

   • RESP

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Tax-Free First Home Savings Account (FHSA)

 

Proposed in Budget 2022, this new registered plan would give prospective first-time home buyers the ability to save $40,000 on a tax-free basis. Like a RRSP, contributions would be tax-deductible, and withdrawals to purchase a first home—including from investment income—would be non-taxable, like a TFSA. 

 

The FHSA will have an $8,000 annual contribution limit in addition to a $40,000 lifetime contribution limit. Expected to be available later in 2023.