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Part 2: Understanding different account types

Different account types have different features and perks that can help make investing more efficient. Learn about the five main types of accounts.

To help you save for what you want, there are different kinds of accounts available, with different features.

Non-registered investment accounts are flexible and easy to use. Just keep in mind that all earnings in these accounts are taxable, in the year they’re received.

Registered retirement savings plans (RRSPs) are designed to help you save for retirement. Tax-free savings accounts (TFSAs) let you invest your money tax free.

Registered education savings plans (RESPs) are designed to help you save for a child’s post-secondary education.

If you’re incorporated, a corporate investment account allows you to keep your business investments separate from your personal ones.

There’s a lot to consider when choosing which accounts work best for you, such as your current and future household income and whether you’re incorporated.

Want to benefit from the advice of a specialist? Our MD Advisors* can help you understand which combination of account types makes the most sense for you and your family, both now and in the future.

PREVIOUS: Part 1 – Setting clear goalsNEXT: Part 3 – Deciding how you want to invest

Keep on reading…

RRSP, TFSA or both? What you need to know  Opening your first RRSP or TFSA? Why TFSAs are a good option for incorporated physicians TFSAs: Tackling your most frequently asked questions 

Hey there. Welcome to MD’s Investing 101 series. These short videos are designed to help investment beginners better understand the basics of investing.

We know that not all financial goals are the same. That’s why we offer different kinds of accounts with different features to help you save for what you want.

Depending on your situation and goals, a combination of different accounts can be the most efficient way to achieve investment success.

Here, we’ll briefly look at five popular types of accounts.

Non-registered investment accounts are flexible and easy to use. You can put in as much as you want, take it out when you like, and hold it jointly, which opens up other planning opportunities.

Just keep in mind that all earned income is taxable.

Registered retirement savings plans (RRSPs) are accounts designed to help you save for retirement. Use an RRSP to reduce your taxable income right now and defer taxes to when you pull the money out.

However, there are annual limits to how much you can contribute and remember to keep contribution deadlines in mind.

Spousal RRSPs can help lighten the tax load on married or common law partners.

Keep in mind that RRSP balances can be borrowed to help you buy a home or go back to school.

Tax free savings accounts (TFSAs) let you invest your money tax free.

TFSAs have enough flexibility to help you achieve a variety of goals while minimizing taxes. However, there are contribution limits.

Contrary to popular belief, you can invest in many different investment types in a TFSA.

Registered education savings plans are designed to help parents, grandparents or other friends and family members save for a child’s post-secondary education.

Investments in RESPs grow tax deferred, allowing your money to work harder towards the education savings goal.

Additionally, you may qualify for different government grants such as the Canada Education Savings Grant.

If, like many physicians, you’ve incorporated your medical practice, a corporate investment account allows you to keep your business investments separate from your personal investments.

Along with tailoring investments to the needs and goals of your practice, corporate accounts can yield other planning opportunities.

For more information about account types, details on how they can fit into your financial plan and help deciding which ones makes the most sense for you, get in touch with an MD Advisor. He or she will be happy to answer any questions and tell you more.

* MD Advisor refers to an MD Management Limited Financial Consultant or Investment Advisor (in Quebec), or an MD Private Investment Counsel Portfolio Manager.