Fee-Only Financial Planning / Advising in Kitchener Waterloo Cambridge - WD Development


Saving and Taxes, Part 3

Saving and Taxes, Part 3

Over the last few weeks, we have reviewed different types of savings.  This week, we look at the tax consequences of the different types of accounts that you can save in.


Type of Account Ideal Timeline Type of Investments Available Tax on Investment Returns Yearly Tax on Withdrawal
Bank Account Emergency/Short Cash only Yes, if you receive interest No
TFSA Emergency/Short/Long Flexible No  No
RSP Long Flexible No Yes, in the same brackets as earned income
Non-Registered Investment Account Emergency/Short/Long Flexible Yes Only on previously unrecognized capital gains

Individual Pension Plan

*available to incorporated business owners only

Long Flexible No

Yes, in the same brackets as earned income

*also subject to a yearly maximum withdrawal amount


Tax consequences are an important part of both yearly and long-term planning.  Often, we think about tax consequences only when it comes to ur investment decisions.  “I don’t want to sell that stock, I’d have to pay capital gains!”  While tax is an important consideration, it shouldn’t drive your investment decisions; when it does, your portfolio’s risk profile tends to drift out of bounds.


In your planning, reviewing tax consequences while planning for both accumulation years and spending years has significant benefits for you and your family.


A financial plan tailored to your specific goals and family situation will give you the information that you need to make decisions today and in the future.  Contact WD Development at 519-569-7526 or [email protected] to book an appointment.

Disclaimer: the above is intended for information purposes only.  WD Development recommends a comprehensive financial plan developed by a qualified advisor.  Please consult with your financial and tax advisors before making decisions.

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