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By Jenny Diplock
Special to the Financial Independence Hub
Personal savings are just that: personal. How much, why and how you save your money should be tailored to you and your personal goals and financial circumstances.
However, many Canadians feel uncertain when it comes to how to invest their money. In fact, a new survey from TD finds many Canadians have mixed views when it comes to the choosing the best method to save for the future. While over half of Canadians surveyed (59 per cent) agree that TFSAs and RRSPs are a crucial part of their savings strategy, one in four (27 per cent) admit they don’t know the differences between the two – whether that’s the contribution limits, withdrawal considerations or impact on taxable income.
If you’re thinking of starting to save – or want to improve your current savings plan – you may want to consider an RRSP, a TFSA, or a combination of the two. Both are great tools for saving that can be used separately or together. But how you use them depends on why you’re saving money, and when and how you want to access it.
For example, if your goal is short-term, like a new vehicle or a home renovation, a TFSA will allow you to grow your money tax-free and you can access it at anytime without penalty. If your goals are long-term, like retirement, an RRSP may be the way to go. People often think that they need to pick one over the other, but that’s not the case. Most people have both short- and long-term goals, so a mix of both TFSAs and RRSPs is often the best choice.
Whether you’re planning for long-term retirement or for a goal in the near term, the important thing is to save your money where it’s going to work best for you. Financial planning doesn’t have to be intimidating and there’s no one size fits all approach when it comes to saving for your future. A financial advisor can work with you to develop a personalized plan that aligns with your time horizon, risk tolerance and personal goals, and will help you feel confident that you’re choosing the best option for your future.
Background info: Survey findings are based on an Ipsos poll conducted between December 17 and 19, 2019, on behalf of TD. A representative sample of 1,500 Canadians aged 18 and over were interviewed online. The poll is accurate to within ±2.9 percentage points.
Jennifer Diplock is Associate Vice-president, Personal Savings and Investing, TD Bank Group, based in Toronto.
