“Who is holding your money hostage? Part 2”



 “Who is holding your money hostage? Part 2”

Last week I spoke about who was holding your money hostage and with that premise I would like to talk about Retirement Savings Plans and Tax Free Savings Accounts. Both the RRSP and TFSA should be used for long term savings. The difference between the two is accessibility.

TFSA contributions are made with dollars that you have already paid income tax on and any growth in your account is all yours, to keep. You do not have to share with Revenue Canada. Plus, should you need it, you can access every dollar of it at any time.

RRSP’s on the other hand create a tax deduction on contribution. What too many of us forget is that we need to pay the tax when we withdraw the money. So unlike a TFSA, the entire balance in your RRSP is not yours to keep.

For example, if you need $10 000 from our RRSP, you actually need to withdraw over $12 000 because 20% tax is withheld immediately. In addition, there may be more taxes to be paid on your annual tax return. As a result, compared to TFSA’s , RRPS’s are another situation where your money is held hostage and you have to pay a ransom to get it back.

If you would like some straight talk about where your money is being held hostage and how you can get it working for you, OR just want to get more information, you can set up a complimentary, 30- minute phone consultation at



email me at michael@mjhfinancial.ca .