Every start to the year allows Canadians to reassess their finances before venturing into other commitments like a home purchase or a property investment. In assessing their finances, it is essential for Canadians to determine the benefits of several savings vehicles, according to a market watcher.
In a think piece on Ratehub.ca, market watcher Zack Fenech said Tax-Free Savings Accounts (TFSAs), Registered Retirement Savings Plans (RRSPs), High-Interest Savings Accounts (HISAs), and Guaranteed Investment Certificates (GICs) provide Canadians with an opportunity to achieve their savings goal.
TFSAs, for instance, allow tax-free withdrawals and deposits and earn interest exempted from tax.
"Placing your money in a TFSA and making regular contributions will increase your wealth for only keeping your money in the right account," Fenech said.
While RRSPs do not offer tax-free withdrawals, they provide Canadians with income-tax deductions. Those who make regular contributions to their RRSPs can earn additional funds on a return.
Contributions to HISAs, on the other hand, accumulate higher interest. However, funds earned inside an HISA are considered income and are taxable. For Canadians looking to earn more at a quicker rate, saving in HISAs could be ideal, Fenech said.
For diligent savers, Fenech recommended getting GICs.
"GICs are inaccessible term deposits. Interest tends to be higher, the more extended the deposit is. A common term deposit is the one-year term GIC. Depositing money into a GIC in January can have a great payout once December comes around," he said.