Keeping investments inside an RRSP lets them grow tax-free. That makes it more suitable for some investment types.
If a person was to buy a number of different types of investments but only has room to store some of them inside an RRSP. Which should be kept inside, and which make sense to keep outside an RRSP?
For example, a person has only enough room for $20,000 of RRSPs. They already have sufficient emergency funds in a savings account in their TFSA. That person plans to buy all of the following:
- $20,000 TD Canadian Index (Canadian stock market index fund)
- $20,000 TD US Index (U.S. stock market index fund)
- $20,000 TD Canadian Bond Index (Canadian bond index fund)
- $20,000 in a 5-year ING Direct GIC paying 2.5% interest
Which should be kept inside the RRSP and which could be left outside? And why?