TFSA vs RRSP: How do you choose? Or do you?

As we reflect on the past few years, we are reminded of how important it is to set money aside for savings -not just solely for retirement but for any unexpected reasons. So when it comes to savings, the question of which is better – a TFSA or an RRSP, is something that bears discussing. 


How do you choose? Or do you?

The answer is: there is no one answer for everyone. They both have their advantages, but depending on your situation, one might be better than the other. The RRSP offers greater tax benefits under the right circumstances but the fact that you have to pay income taxes when you take out money from it makes it less flexible. The TFSA may not provide as many tax benefits as the RRSP, but since taking money out of it has no tax consequences, it’s much more flexible.

Regardless of whether you choose the RRSP or TFSA (or make use of both!), one of the best things you can do is invest consistently.

So how do you choose? Take a look at our comparison chart to help understand the differences and then discuss with us how we can ensure you maximize your investment savings.





Any type of savings (short or long term) and emergency fund

Retirement savings


Open account as soon as you turn 18 (19 in B.C.)

Does not require earned income Withdrawn anytime for anything

No minimum age to open but requires employment income

If withdrawn, tax will need to be paid, unless it’s being used for First Time Home purchase or Lifelong Learning Plan

Investment Options

Cash, qualified securities, fixed income, mutual funds, etc.

Cash, qualified securities, fixed income, mutual funds, etc.

Tax Rules

Tax-sheltered growth on investments

Tax already paid on the money you contribute, which may be an advantage if your tax rate is higher when you withdraw the money

Tax-sheltered growth on investments

Defer taxes until you retire, which may be an advantage if your tax rate is lower at retirement


Annual Maximum – varies year to year. Max $6,500 for 2023

Lifetime Maximum Contribution cannot exceed

$88,000 as of 2023.1

18% of pervious year’s earned income up to

$30,780 for 2023 (whichever is lower)

Tax Deduction


Yes, during the year you make the contribution or carry it forward

Withdrawal Rules

Withdraw any amount at any time without paying tax

When you cash out, it’s tax free

Can only replace the amount of the withdrawal in the same year if you have available room

Withdraw any amount at any time subject to income tax

When you cash out, you have to pay income tax



Must be converted to RIF by Dec. 31 of the year you turn 71 (no further contributions allowed)


TFSAs and RRSPs are both excellent options for long-term investing, and both offer tax advantages, but determining the best one depends on what you’re investing for. Ideally, you should spread out your savings and contribute to both.

Questions to consider:

Do you think your income will change significantly over the short, medium and long term?

Do you expect to make a major purchase in the next 5 years?

Is one of these better if you are married or have kids?

Our Best Tip:

If an RRSP is right for you, consider maximizing your RRSP contributions to get a large tax refund and put that refund into your TFSA. That way, you have more money working for you and you’ll have a mix of long-term retirement funds (RRSP) and flexible funds (TFSA).

One last reminder:

If you go the RRSP route, don’t spend your refund, and if you go the TFSA route, don’t spend your TFSA.

Whatever route you go, keep on saving.

Contact information

R Hunter Wealth Management Group

700 – 737 Yates Street Victoria, BC V8W 1L6         Tel.: 250-953-8415


National Bank Financial is an indirect wholly-owned subsidiary of National Bank of Canada. The National Bank of Canada is a public company listed on the Toronto Stock Exchange (NA: TSX).

This information was prepared by Rob Hunter, a Senior Wealth Advisor with National Bank Financial. The particulars contained herein were obtained from sources that we believe reliable but are not guaranteed by us and may be incomplete.

The opinions expressed are based on our analysis and interpretation of these particulars and are not to be construed as solicitation or offer to buy or sell the securities mentioned herein. National Bank Financial may act as financial advisor, fiscal agent or underwriter for certain of the companies mentioned herein and may receive remuneration for its services. Rob Hunter, National Bank Financial and/or its officers, directors, representatives, and associates may have a position in the securities mentioned herein and may make purchases and / or sales of these securities from time to time in the open market or otherwise.

The opinions expressed herein do not necessarily reflect those of National Bank Financial. Several of the securities mentioned in this article may not be followed by National Bank Financial’s Research department.

The securities mentioned (inclusive of option strategies) in this article are not necessarily suitable to all types of investors.  Please consult your investment advisor to discuss investment risks. All prices and rates are subject to change without notice. Stocks typically fluctuate in value. Stock values can go to zero.

Selling calls against stock (Covered Writing): Shares may need to be sold at the strike price of the option at any time prior to expiration. If the calls are assigned, further opportunity for appreciation in the underlying security above the strike price is foregone.

Risk/Reward of the strategy = Strike price minus the purchase price of the underlying plus the premium received from the sale of the call. The maximum loss is the same as holding a long position less the premium received.

The investment advice given only applies to residents of the provinces of British Columbia, Alberta, Manitoba, Saskatchewan, Ontario and Quebec.

National Bank Financial is a member of the Canadian Investor Protection Fund.