Financial Freedom Front
Canadian Accounts

TFSA, FHSA, RRSP — decoded.

Which account should you use first? Here's the plain-English answer for every stage of your life.

TFSA

Tax-Free Savings Account

Contribution room
In 2024 the annual room is $7,000. Unused room carries forward.

What is it?

A flexible account where your investments grow completely tax-free. Withdraw anytime, for anything.

Who should use it?

Almost every Canadian 18+. Great as your first investing account.

Benefits
  • No tax on growth, dividends or withdrawals
  • Withdraw anytime with no penalty
  • Contribution room grows every year
When to skip

Don't hold your emergency fund inside your TFSA  — keep that in cash.

Real example

You invest $6,000 in a low-cost ETF. It grows to $18,000 over 15 years. You pay $0 tax when you take it out.

FHSA

First Home Savings Account

Contribution room
$8,000 per year, $40,000 total lifetime limit.

What is it?

A newer account that combines the best of TFSA and RRSP — for first-time home buyers.

Who should use it?

Canadians 18+ who haven't owned a home in the last 4 years and plan to buy one.

Benefits
  • Contributions are tax-deductible (like RRSP)
  • Withdrawals for a first home are tax-free (like TFSA)
  • Up to $8,000/year, $40,000 lifetime
When to skip

Not useful if you're sure you'll never buy a home — use a TFSA instead.

Real example

You contribute $8,000. You get a tax refund on it. Later, you withdraw it tax-free for your down payment.

RRSP

Registered Retirement Savings Plan

Contribution room
18% of your previous year's income, up to $31,560 (2024).

What is it?

Contributions lower your taxable income today. You pay tax later when you withdraw in retirement.

Who should use it?

Best for higher-income earners and long-term retirement savings.

Benefits
  • Immediate tax deduction
  • Tax-sheltered growth until withdrawal
  • Home Buyers' Plan lets you borrow from yourself
When to skip

Skip until your income is meaningful — a TFSA usually beats RRSP for students.

Real example

You earn $80k and contribute $10k. Your taxable income drops to $70k — a refund of ~$3,000.

Non-Registered

Regular Investment Account

Contribution room
Unlimited — but every gain is taxed.

What is it?

A standard brokerage account with no tax shelter. Use it after maxing everything else.

Who should use it?

High savers who've maxed TFSA, FHSA and RRSP room.

Benefits
  • No contribution limits
  • Capital gains only 50% taxable
  • Flexible — invest in anything
When to skip

Don't start here. Fill your TFSA and FHSA first.

Real example

You sell shares for a $10,000 profit. Only $5,000 is added to your taxable income.