i have and rrsp (registered) and jsut opened up another acount to start saving for a house. I am with scotia and when i go online i can see my two accounts, one say registered acount and gives the balance (rrsp) the other says non-registered
whats the difference between the two?
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RRSP stands for registered retirement savings plan, a vehicle invented by gov’t to allow you to save for retirement by letting you deduct the money from your income now to put in a fund where it grows in value over time in a tax sheltered manner, this means no tax happens until you withdraw money from the plan, at that time all money withdrawn is subject to income tax in the year it is taken out.
Non-registered savings, means you can not deduct the money put in from your income subject to tax, and as it grows in value, income tax my be necessary some years, but eventually you only pay tax on the growth amount, not the original amount, and if there are dividends, you pay a lower rate on them, capital gains are treated better as well.
No matter what anyone tells you, RRSP,s are not a good idea.
Non-registered investments are very good ideas.
There is a simple explanation. Money in a registered savings account is tax exempt. Money in a non-registered account is not.