1. What is RRSP?
RRSP stand for Registered Retirement Savings Plan. It provides Canadians with an opportunity to save for retirement.
Advantages of RRSP:
Contributions are tax deductible. Example: If your annual income is $50,000 and if you contribute $5,000 in RRSP, then your taxable income would reduce to $45,000
Contribution room: An individual can contribute up to 18% of their earned income up to a maximum of $29,210 for 2022 .
Tax Deferred growth, which means any growth within the account is not taxed. Example: Individual A invests $5,000 in RRSP and after one year, his RRSP grows to $6,000. This individual would not be required to pay any tax on the growth.
Various Investments options within RRSP like ETF’s, mutual funds, stocks, GICs etc.