I have $5,000 that I would like to put in to an investment account. To get the maximum tax benefit, should I put it in my RRSP, my child's RESP, or my TFSA account? I have enough room in each of these, and I shouldn't need to use it for 15 years.


The above is very true, but the biggest bang for your buck can also be in the RESP, assuming you qualify for the grant of 20% per year...it's hard to beat free money from the government...in this account, your investment grows, and the growth and grant is taxed in the hands of the child when it is withdrawn. (Normally, they dont have much income at this point, so pay little or no tax) However, you do not get any income tax deduction or tax break at the time you make the deposit.

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  • Welcome! +1 for RESP & "it's hard to beat free money from the government" :-) – Chris W. Rea Dec 20 '09 at 13:59
  • What do you mean by "the above is very true"? – yoozer8 Jun 12 '19 at 14:54

It really depends on your taxable income. If you are in a higher tax bracket and expect to be in a lower tax bracket in retirement, the RRSP is probably your best bet. If, however, you are in a low tax bracket now, then it might be best to start with your TFSA.

Hope this helps!

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  • Hi MDJ! Thanks. BTW, S. Chang asked the question - I had just edited the tags; I removed my name from the beginning of your post. – Chris W. Rea Oct 25 '09 at 14:20

It also depends on what kind of investment account you are putting this in. Since a TFSA account doesn't get taxed on the return, it might make sense to put higher risk investments in that account. Of course, MDJ's comment about looking at tax brackets is also important...

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