RRSP's or TFSA

I did it. I opened a Tax Free Savings Account (TFSA). I feel like an adult now, having an account that is earning interest, creating an emergency fund for myself, and growing my savings. I could only have dreamed to be acting this responsible just four months out of school.

Although I am just starting out with building up my emergency fund and vacation fund in this account, I eventually will be putting money away for savings for retirement, the future, or whatever else. The woman who helped me basically told me they usually make people put in at least $500 at a time(I don’t know why, maybe to get people to not come in constantly putting $50 each time) So I did that. My technical savings for August are only supposed to be $200 and $50 for my vacation fund, so I am already well ahead of schedule. Which is good because if I do not find another job for January-March, I am going to need that money!

When I started blogging I was clueless at investing, and I am constantly reading, growing, and learning more about it. I was unsure of where to invest my money, as there are so many different opinions on the subject. I recently came across this Money Sense article in which Malcolm Hamilton discusses which type of investment is better; RRSP’s or TFSA’s.

He says that if you make “less than average income” (less than $50,000), you should just concentrate on maxing out your TFSA, as you lose about 40% of your investment taking the same money out of our RRSP at retirement. The only time it does not matter which type you put money towards is if you have a higher income, about $70,000+.
So as a lower income individual, I should be concentrating solely on my TFSA instead of RRSP’s. Good to know!Given this information, I am just going to attempt to max out my TFSA every year after my debt is paid off. As for while I am in debt, I haven’t fully decided, but I will be constantly contributing to my TFSA, as much as it makes sense to for me.

How do you decide where to invest your money?