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TFSA vs RRSP vs FHSA What’s Right For You
Financial Matters

TFSA vs RRSP vs FHSA: What’s Right for You?

Compare three popular registered investing accounts to find the right fit for you.

When it comes to investing, there’s a lot to know. But one of the first things every investor needs to determine is what type of account (or accounts) will best help them meet their savings and retirement goals. Once that’s determined, let the investing begin!

There are a number of popular registered accounts held by Canadians, but three often come up when looking to save for goals like travel or a big purchase, retirement or a first home.

At first blush, the Tax-Free Savings Account (TFSA), Registered Retirement Savings Plan (RRSP) and First Home Savings Account (FHSA) have plenty in common. After all, registered accounts like these boast tax advantages on income (unlike non-registered accounts) and can hold a variety of qualified investments, such as stocks, exchange-traded funds (ETFs), mutual funds, guaranteed investment certificates (GICs), bonds and more.

However, while all offer tax benefits, there are some key differences that can help you choose what’s right for you.




What is it?

A registered plan where your investment earnings and withdrawals are tax-free

Explore TFSAs

A registered plan where your contributions are tax-deductible (up to your personal deduction limit) and investment earnings are tax-deferred (you are charged taxes when you withdraw funds)

Explore RRSPs

A new registered plan designed to help first time homebuyers. Your contributions are tax-deductible and investment earnings and withdrawals are tax-free if used to purchase your first home

Explore FHSAs

Who can open one?

Canadian residents with a Social Insurance Number (SIN) who are at least 18 or 19 (age of majority in your province)

Canadian residents with a Social Insurance Number (SIN) who are under age 71, have earned income and file a tax return in Canada

Canadian residents with a Social Insurance Number (SIN) who are at least age 18 (and no less than the age of majority in your province) and under age 71, and you and/or your spouse or common-law partner have not owned a home where you lived in the current calendar year or at any time in the preceding four calendar years

Are contributions tax-deductible?


Yes (up to your personal deduction limit)

Yes (up to the annual and lifetime limits)

Do my savings grow tax-free or tax-deferred?


Tax-deferred (added to taxable income the year you take the money out; a withholding tax will also apply to early withdrawals)

Tax-free as long as you use funds for a qualifying first home

How much can I contribute each year?

$6,500 for 2023 plus your unused contribution room and any amounts you’ve withdrawn from previous years

18% of previous year’s earned income, less any pension adjustment, up to maximum annual limit ($30,780 for 2023)

$8,000 annually, plus up to $8,000 of your unused contribution room, up to a maximum lifetime limit of $40,000

Choosing the right account (or combination of accounts) can help keep you on track to reach your goals. Visit Compare TFSA vs RRSP vs FHSA to learn more about the three registered accounts at RBC. For more from our partners at Inspired Investor, visit rbc.com/inspiredinvestor.

This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.

Mutual Funds are sold by Royal Mutual Funds Inc. (RMFI). There may be commissions, trailing commissions, management fees and expenses associated with mutual fund investments. Please read the Fund Facts/prospectus before investing. Mutual fund securities are not insured by the Canada Deposit Insurance Corporation. For funds other than money market funds, unit values change frequently. For money market funds, there can be no assurances that a fund will be able to maintain its net asset value per security at a constant amount or that the full amount of your investment in a fund will be returned to you. Past performance may not be repeated. RMFI is licensed as a financial services firm in the province of Quebec.

Financial planning services and investment advice are provided by Royal Mutual Funds Inc. (RMFI). RMFI, RBC Global Asset Management Inc., Royal Bank of Canada, Royal Trust Corporation of Canada and The Royal Trust Company are separate corporate entities which are affiliated. RMFI is licensed as a financial services firm in the province of Quebec.

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