What goes where: Funding your registered accounts

Take advantage of tax breaks, but don't forget about growth.

Matthew Elder 1 March, 2016 | 6:00PM

The first step toward funding a comfortable retirement is to ensure you set aside enough money each year so that your nest-egg can grow over time. Contributing as much as you can afford, up to the maximum allowable amounts each year to tax-assisted schemes such as the registered retirement savings plan (RRSP), tax-free savings account (TFSA) and registered education savings plan (RESP), is important. In addition, it's essential to hold the right types of investments in these plans -- not just for the tax advantages but also for fundamental investment reasons.

So with the 2015 RRSP contribution deadline now past, it's a good time to review the contents of your various accounts in order to take full advantage of the tax rules and to ensure your medium- and long-term financial needs can be met.

According to conventional thinking, an RRSP, TFSA or RESP should be the place to hold fully taxed investments such as cash and interest-paying securities. Stocks and equity funds -- which produce capital gains and dividends that are taxed at preferential rates -- should ideally be held in a non-registered account. But of course there are other things to consider. Among them is the need to achieve good long-term growth, particularly within an RRSP, which means also including equities.

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Matthew Elder

Matthew Elder  

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