If you’re in the process of investing, it can be difficult to know when the best time is to begin investing. After all, if you invest too late, it could mean missing out on returns. Fortunately, there’s a way to make sure that your investment timing doesn’t affect your long-term returns – by investing as soon as possible and accepting that there may be dips along the way.
As evidenced by the long term return graph on PortfolioCharts.com, it’s very unlikely that you will be “the unlucky investor” who chooses a bad start date every month – statistically speaking. Instead of choosing one lump sum day to start investing all at once, consider spreading out your investments over several months (or even more) so that you can reduce risk and even out returns.
When deciding between contributing to a TFSA vs RRSP account, there are many factors at play such as age; TFSA room; expected future earnings; and expected retirement marginal income tax rate among others. Knowing these details can help inform which account will work best for you and help maximize your savings potential for both now and later in life. Generally speaking though if your goal is shielding from annual taxation then using all of your TFSA contribution room before contributing to an RRSP is usually what’s recommended unless certain conditions apply like having an employer match or expecting higher tax bracket during retirement (among others).
Finally if you have $80K of room in your TFSA consider using this option instead since no income tax will be applied when pulling money out down the line – plus don’t forget about getting back any unused portion! Ultimately no one has a crystal ball so it’s important to do research before making any decisions but with this advice hopefully you’ll have a better understanding of how TFSAs vs RRSPs work so that you can make the right choice for yourself!
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Author Eliza Ng