Q&A: TFSA Profits

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A reader expects to earn 25 per cent a year on his money. Is it better doing so in an RRSP or TFSA?


Q – I just read your book about TFSAs. My question is: If I am a middle or high income person, regardless my age, with a self directed account, able to get returns over 25 per cent a year, saving for my retirement, what would be the best for me? Should I take advantage of the $5,500 allowance in my TFSA and the put the rest in my RRSP or invest everything in my RRSP and forget about putting any money in my TFSA?

My question is because in the book you are conservative about the returns and it is not clear for me what would be better between an RRSP and a TFSA if you can get higher returns. – Juan B.


A – If you can consistently produce returns of 25 per cent a year, perhaps you would like to share your secrets with our readers. It’s something we’d all like to know. As far as your question is concerned, making use of the TFSA should certainly be your first priority. Any profits in an RRSP will be taxed at your marginal rate when the money comes out. Withdrawals from a TFSA are tax-free. – G.P.


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