{"appState":{"pageLoadApiCallsStatus":true},"articleState":{"article":{"headers":{"creationTime":"2016-03-26T21:11:45+00:00","modifiedTime":"2018-10-30T17:17:10+00:00","timestamp":"2022-09-14T18:16:51+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Retirement","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34308"},"slug":"retirement","categoryId":34308}],"title":"RRSP Basics for Canadians","strippedTitle":"rrsp basics for canadians","slug":"rrsp-basics-for-canadians","canonicalUrl":"","seo":{"metaDescription":"For almost all Canadians, a Registered Retirement Savings Plan (RRSP) is the single best, easiest, and most efficient way to save for retirement. An RRSP also o","noIndex":0,"noFollow":0},"content":"<span lang=\"EN-CA\">For almost all Canadians, a Registered Retirement Savings Plan (RRSP) is the single best, easiest, and most efficient way to save for retirement. An RRSP also offers one of the best ways to reduce the amount of tax you pay.</span>\r\n<h2 id=\"tab1\" >The benefits of RRSPs</h2>\r\n<span lang=\"EN-CA\">When you open an RRSP, you’re making a deal with the government. By “registering” your retirement savings plan, you agree to put money away for your retirement and not spend it. In return, the government gives you two valuable benefits:</span>\r\n<ul>\r\n \t<li><strong>Money that you contribute to your RRSP is deductible from your taxable income. </strong>This means that any income you contribute to your savings plan is not taxed. Say you earn $50,000 a year, and contribute $5,000 to your RRSP. If you claimed that $5,000 as a deduction on your tax return, your income tax would be calculated as though you had made only $45,000 that year.</li>\r\n \t<li><strong>The government lets the savings in your RRSP grow tax free.</strong> Any profits you earn on investments inside your RRSP aren’t taxed until you close your plan and withdraw the funds. When interest and earnings on investments aren’t taxed, the full value of your gains is added to the original amount. This new, larger amount then earns further gains, which again are added to, or compounded with, your existing investments. This phenomenon is called <em>compound growth,</em> and over time it will lead to your retirement savings growing exponentially.</li>\r\n</ul>\r\n<h2 id=\"tab2\" >Maximizing your RRSP’s growth</h2>\r\nYou can maximize the growth of your RRSP in two simple steps:\r\n<ul>\r\n \t<li><strong>Begin contributing </strong><strong>as early as you can</strong><strong> — and are eligible to — in life.</strong> The longer you have money in an RRSP, the more time your savings have to compound. Even if you’re just 25 and you have only $1,000 to spare, put it in an RRSP! If you earn an average of 10 percent a year, you’ll have an extra $45,000 in your plan when you retire at 65.</li>\r\n \t<li><strong>Try to maximize your RRSP’s returns. </strong>Choosing appropriate investments is critical to maximizing the growth of your RRSP. And the more years you have before you have to collapse your plan, the larger the impact of boosting your returns by even just 1 percent or 2 percent.</li>\r\n</ul>","description":"<span lang=\"EN-CA\">For almost all Canadians, a Registered Retirement Savings Plan (RRSP) is the single best, easiest, and most efficient way to save for retirement. An RRSP also offers one of the best ways to reduce the amount of tax you pay.</span>\r\n<h2 id=\"tab1\" >The benefits of RRSPs</h2>\r\n<span lang=\"EN-CA\">When you open an RRSP, you’re making a deal with the government. By “registering” your retirement savings plan, you agree to put money away for your retirement and not spend it. In return, the government gives you two valuable benefits:</span>\r\n<ul>\r\n \t<li><strong>Money that you contribute to your RRSP is deductible from your taxable income. </strong>This means that any income you contribute to your savings plan is not taxed. Say you earn $50,000 a year, and contribute $5,000 to your RRSP. If you claimed that $5,000 as a deduction on your tax return, your income tax would be calculated as though you had made only $45,000 that year.</li>\r\n \t<li><strong>The government lets the savings in your RRSP grow tax free.</strong> Any profits you earn on investments inside your RRSP aren’t taxed until you close your plan and withdraw the funds. When interest and earnings on investments aren’t taxed, the full value of your gains is added to the original amount. This new, larger amount then earns further gains, which again are added to, or compounded with, your existing investments. This phenomenon is called <em>compound growth,</em> and over time it will lead to your retirement savings growing exponentially.</li>\r\n</ul>\r\n<h2 id=\"tab2\" >Maximizing your RRSP’s growth</h2>\r\nYou can maximize the growth of your RRSP in two simple steps:\r\n<ul>\r\n \t<li><strong>Begin contributing </strong><strong>as early as you can</strong><strong> — and are eligible to — in life.</strong> The longer you have money in an RRSP, the more time your savings have to compound. Even if you’re just 25 and you have only $1,000 to spare, put it in an RRSP! If you earn an average of 10 percent a year, you’ll have an extra $45,000 in your plan when you retire at 65.</li>\r\n \t<li><strong>Try to maximize your RRSP’s returns. </strong>Choosing appropriate investments is critical to maximizing the growth of your RRSP. And the more years you have before you have to collapse your plan, the larger the impact of boosting your returns by even just 1 percent or 2 percent.</li>\r\n</ul>","blurb":"","authors":[],"primaryCategoryTaxonomy":{"categoryId":34308,"title":"Retirement","slug":"retirement","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34308"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[{"label":"The benefits of RRSPs","target":"#tab1"},{"label":"Maximizing your RRSP’s growth","target":"#tab2"}],"relatedArticles":{"fromBook":[],"fromCategory":[{"articleId":288529,"title":"401(k)s and IRAs For Dummies Cheat Sheet","slug":"401ks-and-iras-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","retirement"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/288529"}},{"articleId":268853,"title":"How to Manage Your Pension","slug":"how-to-manage-your-pension","categoryList":["business-careers-money","personal-finance","retirement"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/268853"}},{"articleId":268848,"title":"How to Take Money Out of Your IRA","slug":"how-to-take-money-out-of-your-ira","categoryList":["business-careers-money","personal-finance","retirement"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/268848"}},{"articleId":268843,"title":"How to Manage Your IRA Contributions","slug":"how-to-manage-your-ira-contributions","categoryList":["business-careers-money","personal-finance","retirement"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/268843"}},{"articleId":268838,"title":"How to Get Online with Your IRA Provider","slug":"how-to-get-online-with-your-ira-provider","categoryList":["business-careers-money","personal-finance","retirement"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/268838"}}]},"hasRelatedBookFromSearch":true,"relatedBook":{"bookId":298225,"slug":"rrsps-tfsas-for-canadians-for-dummies","isbn":"9781119912736","categoryList":["business-careers-money","personal-finance","retirement"],"amazon":{"default":"https://www.amazon.com/gp/product/1119912733/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119912733/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119912733-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119912733/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119912733/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/rrsps-and-tfsas-for-canadians-for-dummies-cover-9781119912736-203x255.jpg","width":203,"height":255},"title":"RRSPs & TFSAs For Canadians For Dummies","testBankPinActivationLink":"","bookOutOfPrint":true,"authorsInfo":"\n <p><p><b>Bryan Borzykowski</b> is an award-winning financial journalist, who writes mostly about investing, personal finance and small business. He’s the co-author of <i>Day Trading For Canadians For Dummies</i> and contributes to the <i>Globe and Mail</i>, <i>Business</i> magazine, the <i>Toronto Star</i>, MoneySense and other leading Canadian publications. You can find Bryan at www. bryanborzykowski.com or on Twitter @bborzyko.</p> <p><b>Andrew Bell</b> was an investment reporter and editor with The Globe and Mail for 12 years. He joined Business News Network as a reporter in 2001. Bell, an import from Dublin, Ireland, was for 10 years the main compiler of Stars & Dogs in Saturday’s Globe. The roundup of hot and damp stocks and mutual funds was an invaluable therapeutic aid in relieving his own myriad jealousies, regrets, and resentments. He has also taken to the stage, where he practises a demanding \"method\" that involves getting the audience and other performers as off-balance and upset as possible. He lives in Cabbagetown, Toronto, with his wife and daughter.</p> <p><b>Christopher Cottier</b>, BSc, MBA, is a senior investment advisor based in British Columbia. In 1982, he left the world of banking to join the investment industry in Vancouver so he could continue to pursue his love of rugby. More than twenty five years later, he’s still managing money and playing rugby. With Betty Jane Wylie, Christopher is the co-author of <i>The Best Is Yet to Come: Enjoying a Financially Secure Retirement</i> (Key Porter). Christopher was ably assisted by Daniel Quon, BA, who has been awarded the Queen Elizabeth 11 Golden Jubilee Medal.</p> <p><b><b data-author-id=\"34409\">Andrew Dagys</b></b>, CMA, is a best-selling author who has written and coauthored several books, including <i>Stocking Investing For Canadians For Dummies</i> and <i>Investing Online For Canadians For Dummies</i>. He has appeared on Canada AM and several popular CBC broadcasts to offer his insights on the Canadian and world investment landscapes. Andrew has contributed columns to <i>CanadianLiving</i>, <i>Forever Young</i>, and other publications. He has appeared on Canada AM and several popular CBC broadcasts to offer his insights on the Canadian and world investment landscapes.</p> <p><b>Matthew Elder</b> is a writer and communications consultant based in Toronto. Previously he was vice-president, content and editorial, of Morningstar Canada. A Montreal native, he was a columnist and editor specializing in personal finance with <i>The Gazette</i> for 10 years before moving to the Financial Post in 1995, where he was mutual funds editor and columnist until joining Morningstar in 2000.</p> <p><b>Lita Epstein</b>, who earned her MBA from Emory University's Goizueta Business School, enjoys helping people develop good financial, investing, and tax planning skills. She designs and teaches online courses and has written more than 20 books, including <i>Bookkeeping For Dummies</i> and <i>Reading Financial Reports For Dummies</i>, both published by Wiley.</p> <p><b>Douglas Gray</b>, B.A., LL.B., formerly a practicing lawyer, has extensive experience in all aspects of real estate and mortgage financing. He has acted on behalf of buyers, sellers, developers, investors, lenders and borrowers. In addition, he has over 35 years of personal experience investing in real estate. He is the author of 26 best-selling real estate, business and personal finance books, as well as a consultant and columnist.<br />Mr. Gray gives seminars on real estate throughout Canada to the public, as well as for professional-development programs for the real estate industry. He has presented to more than 250,000 people and is frequently interviewed by the media as an authority on real estate and small business entrepreneurship. Mr. Gray is president of the Canadian Enterprise Development Group Inc. and lives in Vancouver, BC. His website is www.homebuyer.ca.</p> <p><b>Michael Griffis</b> became an active trader in the mid 1980s. He first traded commodities and precious metals after taking a commodities trading class as part of his MBA program at Rollins College. He became a stockbroker in 1992, where he helped businesses and individuals manage investments in stocks, bonds, mutual funds, retirement plans, 401(k) employee-savings plans, and asset management programs. Michael is an author and business owner and has written about stock trading for online audiences.</p> <p><b>Ann C. Logue</b>, MBA, is the author of <i>Day Trading For Dummies</i> and <i>Emerging Markets For Dummies</i>. She has written for <i>Barron's</i>, <i>The New York Times</i>, <i>Newsweek Japan</i>, <i>Wealth Manager</i>, and the <i>International Monetary Fund</i>. She is a lecturer at the Liautaud Graduate School of Business at the University of Illinois at Chicago. Her current career follows 12 years of experience as an investment analyst. She has a B.A. from Northwestern University and an M.B.A. from the University of Chicago, and she holds the Chartered Financial Analyst (CFA) designation.</p> <p><b>Peter Mitham</b> has written on Canadian real estate for publications in Canada and abroad. He contributes a weekly column of real estate news for Business in Vancouver and writes regularly for <i>Western Investor</i>, a sister publication focused on real estate investment opportunities in Western Canada, as well as Canadian Real Estate Magazine. He has also collaborated with Douglas Gray on <i>The Canadian Landlord's Guide: Expert Advice for the Profitable Real Estate Investor</i> (Wiley).</p> <p><b>Paul Mladjenovic</b>, CFP is a certified financial planner practitioner, writer, and public speaker. His business, PM Financial Services, has helped people with financial and business concerns since 1981. He is the author of <i>Stock Investing For Dummies</i> (Wiley) and has accurately forecast many economic events, such as the rise of gold, the decline of the U.S. dollar, and the housing crisis. Paul’s personal website can be found at www.mladjenovic.com.</p></p>","authors":[{"authorId":34409,"name":"Andrew Dagys","slug":"andrew-dagys","description":" <p><b>Bryan Borzykowski</b> is an award-winning financial journalist, who writes mostly about investing, personal finance and small business. He’s the co-author of <i>Day Trading For Canadians For Dummies</i> and contributes to the <i>Globe and Mail</i>, <i>Business</i> magazine, the <i>Toronto Star</i>, MoneySense and other leading Canadian publications. You can find Bryan at www. bryanborzykowski.com or on Twitter @bborzyko.</p> <p><b>Andrew Bell</b> was an investment reporter and editor with The Globe and Mail for 12 years. He joined Business News Network as a reporter in 2001. Bell, an import from Dublin, Ireland, was for 10 years the main compiler of Stars & Dogs in Saturday’s Globe. The roundup of hot and damp stocks and mutual funds was an invaluable therapeutic aid in relieving his own myriad jealousies, regrets, and resentments. He has also taken to the stage, where he practises a demanding \"method\" that involves getting the audience and other performers as off-balance and upset as possible. He lives in Cabbagetown, Toronto, with his wife and daughter.</p> <p><b>Christopher Cottier</b>, BSc, MBA, is a senior investment advisor based in British Columbia. In 1982, he left the world of banking to join the investment industry in Vancouver so he could continue to pursue his love of rugby. More than twenty five years later, he’s still managing money and playing rugby. With Betty Jane Wylie, Christopher is the co-author of <i>The Best Is Yet to Come: Enjoying a Financially Secure Retirement</i> (Key Porter). Christopher was ably assisted by Daniel Quon, BA, who has been awarded the Queen Elizabeth 11 Golden Jubilee Medal.</p> <p><b>Andrew Dagys</b>, CMA, is a best-selling author who has written and coauthored several books, including <i>Stocking Investing For Canadians For Dummies</i> and <i>Investing Online For Canadians For Dummies</i>. He has appeared on Canada AM and several popular CBC broadcasts to offer his insights on the Canadian and world investment landscapes. Andrew has contributed columns to <i>CanadianLiving</i>, <i>Forever Young</i>, and other publications. He has appeared on Canada AM and several popular CBC broadcasts to offer his insights on the Canadian and world investment landscapes.</p> <p><b>Matthew Elder</b> is a writer and communications consultant based in Toronto. Previously he was vice-president, content and editorial, of Morningstar Canada. A Montreal native, he was a columnist and editor specializing in personal finance with <i>The Gazette</i> for 10 years before moving to the Financial Post in 1995, where he was mutual funds editor and columnist until joining Morningstar in 2000.</p> <p><b>Lita Epstein</b>, who earned her MBA from Emory University's Goizueta Business School, enjoys helping people develop good financial, investing, and tax planning skills. She designs and teaches online courses and has written more than 20 books, including <i>Bookkeeping For Dummies</i> and <i>Reading Financial Reports For Dummies</i>, both published by Wiley.</p> <p><b>Douglas Gray</b>, B.A., LL.B., formerly a practicing lawyer, has extensive experience in all aspects of real estate and mortgage financing. He has acted on behalf of buyers, sellers, developers, investors, lenders and borrowers. In addition, he has over 35 years of personal experience investing in real estate. He is the author of 26 best-selling real estate, business and personal finance books, as well as a consultant and columnist.<br />Mr. Gray gives seminars on real estate throughout Canada to the public, as well as for professional-development programs for the real estate industry. He has presented to more than 250,000 people and is frequently interviewed by the media as an authority on real estate and small business entrepreneurship. Mr. Gray is president of the Canadian Enterprise Development Group Inc. and lives in Vancouver, BC. His website is www.homebuyer.ca.</p> <p><b>Michael Griffis</b> became an active trader in the mid 1980s. He first traded commodities and precious metals after taking a commodities trading class as part of his MBA program at Rollins College. He became a stockbroker in 1992, where he helped businesses and individuals manage investments in stocks, bonds, mutual funds, retirement plans, 401(k) employee-savings plans, and asset management programs. Michael is an author and business owner and has written about stock trading for online audiences.</p> <p><b>Ann C. Logue</b>, MBA, is the author of <i>Day Trading For Dummies</i> and <i>Emerging Markets For Dummies</i>. She has written for <i>Barron's</i>, <i>The New York Times</i>, <i>Newsweek Japan</i>, <i>Wealth Manager</i>, and the <i>International Monetary Fund</i>. She is a lecturer at the Liautaud Graduate School of Business at the University of Illinois at Chicago. Her current career follows 12 years of experience as an investment analyst. She has a B.A. from Northwestern University and an M.B.A. from the University of Chicago, and she holds the Chartered Financial Analyst (CFA) designation.</p> <p><b>Peter Mitham</b> has written on Canadian real estate for publications in Canada and abroad. He contributes a weekly column of real estate news for Business in Vancouver and writes regularly for <i>Western Investor</i>, a sister publication focused on real estate investment opportunities in Western Canada, as well as Canadian Real Estate Magazine. He has also collaborated with Douglas Gray on <i>The Canadian Landlord's Guide: Expert Advice for the Profitable Real Estate Investor</i> (Wiley).</p> <p><b>Paul Mladjenovic</b>, CFP is a certified financial planner practitioner, writer, and public speaker. His business, PM Financial Services, has helped people with financial and business concerns since 1981. He is the author of <i>Stock Investing For Dummies</i> (Wiley) and has accurately forecast many economic events, such as the rise of gold, the decline of the U.S. dollar, and the housing crisis. Paul’s personal website can be found at www.mladjenovic.com.</p>","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/34409"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/298225"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{"key":"cat","values":["business-careers-money","personal-finance","retirement"]},{"key":"isbn","values":[null]}]\" id=\"du-slot-63221a939b79d\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{"key":"cat","values":["business-careers-money","personal-finance","retirement"]},{"key":"isbn","values":[null]}]\" 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Basics for Canadians
For almost all Canadians, a Registered Retirement Savings Plan (RRSP) is the single best, easiest, and most efficient way to save for retirement. An RRSP also offers one of the best ways to reduce the amount of tax you pay.
The benefits of RRSPs
When you open an RRSP, you’re making a deal with the government. By “registering” your retirement savings plan, you agree to put money away for your retirement and not spend it. In return, the government gives you two valuable benefits:
- Money that you contribute to your RRSP is deductible from your taxable income. This means that any income you contribute to your savings plan is not taxed. Say you earn $50,000 a year, and contribute $5,000 to your RRSP. If you claimed that $5,000 as a deduction on your tax return, your income tax would be calculated as though you had made only $45,000 that year.
- The government lets the savings in your RRSP grow tax free. Any profits you earn on investments inside your RRSP aren’t taxed until you close your plan and withdraw the funds. When interest and earnings on investments aren’t taxed, the full value of your gains is added to the original amount. This new, larger amount then earns further gains, which again are added to, or compounded with, your existing investments. This phenomenon is called compound growth, and over time it will lead to your retirement savings growing exponentially.
Maximizing your RRSP’s growth
You can maximize the growth of your RRSP in two simple steps:
- Begin contributing as early as you can — and are eligible to — in life. The longer you have money in an RRSP, the more time your savings have to compound. Even if you’re just 25 and you have only $1,000 to spare, put it in an RRSP! If you earn an average of 10 percent a year, you’ll have an extra $45,000 in your plan when you retire at 65.
- Try to maximize your RRSP’s returns. Choosing appropriate investments is critical to maximizing the growth of your RRSP. And the more years you have before you have to collapse your plan, the larger the impact of boosting your returns by even just 1 percent or 2 percent.
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