Types of investments

 A Tax-Free Savings Account (TFSA) is a registered tax-advantaged savings account that can help you earn money, tax-free.

You can think of a TFSA like a basket, where you can hold qualified investments, that may generate interest, capital gains, and dividends, tax-free.

Whether you're saving for your dream wedding, a rainy day, your first home, or an extended vacation, a TFSA can help you reach your goals sooner. 

A First Home Savings Account (FHSA) is a registered savings plan designed to help first-time homebuyers save for their first home. It combines features of a TFSA and an RRSP, offering tax-deductible contributions and tax-free withdrawals for qualifying home purchases. You can contribute up to $8,000 annually, with unused contribution room carrying forward to the next year (up to $8,000 max carry-forward), and a lifetime contribution limit of $40,000. Contributions grow tax-free, and funds can remain in the account for up to 15 years.

 An RRSP is what’s called a tax-advantaged account, which is something the government created specifically to provide tax breaks to anyone who takes the time to use them. The money you put in your RRSP is not taxed. At least not right now. That’s the advantage. So your taxes for the year are lower, but also, you have more money to put into your RRSP. That money grows, tax free until it’s time to retire. 

A Registered Retirement Income Fund (RRIF) is a retirement account that provides a steady income stream using savings transferred from an RRSP. Investments within the RRIF grow tax-free, but withdrawals are taxable, and there is a required minimum annual withdrawal based on the account holder's age (e.g., 5.28% at age 71). The minimum withdrawal increases each year, ensuring funds are gradually distributed while offering flexibility in managing retirement income.

A Locked-In Retirement Account (LIRA) is a retirement savings plan that holds pension funds transferred from a workplace pension plan. Funds in a LIRA are locked in, meaning they can only be accessed at retirement or under specific circumstances, such as financial hardship or shortened life expectancy. Investments grow tax-deferred, but withdrawals are restricted and must eventually be converted into a retirement income product, such as a LIF or an annuity.

 The Insured Retirement Plan (IRP) complements your existing retirement strategy with tax-exempt life insurance that offers you tax-free supplemental income. 

If you are at least 10 to 15 years away from retirement, you are maximizing your annual RSP contributions and you are looking for additional tax-deferral strategies, this plan may provide a solution to your needs. You should have excess discretionary income, existing coverage or a need for insurance, and you should be in good health.  At the very least, even without the additional income, the insurance policy will become a key part of your estate plan, enabling you to grow funds on a tax-deferred basis. 

A Registered Education Savings Plan (RESP) is a savings account designed to help parents save for their child's post-secondary education. Contributions grow tax-free, and the government provides support through grants like the Canada Education Savings Grant (CESG), which matches 20% of annual contributions up to $500 per year. In British Columbia, families can also benefit from the B.C. Training and Education Savings Grant (BCTESG), a one-time $1,200 grant for eligible children, and the Canada Learning Bond (CLB) for lower-income families, offering up to $2,000 without requiring contributions. RESP funds can be used for tuition, books, and living expenses, with flexibility to transfer funds if the child doesn’t pursue further education. 

The "Million Dollar Baby" strategy in insurance involves purchasing a permanent life insurance policy, such as whole life insurance, for a child. Parents or grandparents pay premiums into the policy, which accumulates cash value over time. The cash value grows tax-deferred and can be accessed later in life by the child for significant expenses like education, buying a home, or retirement. This strategy provides lifelong coverage, builds wealth through the policy’s cash value, and creates a financial legacy for the child.

Non-registered plans are investment accounts that are not registered with the Canada Revenue Agency (CRA) for tax-deferred growth, unlike registered plans like RRSPs or TFSAs. These accounts do not have the same tax advantages, meaning income earned within them is subject to taxation in the year it is earned. However, non-registered accounts offer more flexibility, as there are no contribution limits or withdrawal restrictions. They are ideal for individuals who have maximized their registered plan contributions or who seek more investment choices without the tax deferral constraints.

These are just the most common accounts, but under comprehensive planning we will discover more accounts and investment options.