Which of the following is an important factor to consider in deciding between saving in a TFSA account or an RRSP account?

Question

Quizplus · Accepted Answer

Your tax bracket is an important factor to consider because it determines the tax benefit you receive from contributing to either account. If you are in a higher tax bracket now, contributing to an RRSP may make more sense as you will reduce your taxable income and potentially save more on taxes. However, if you are in a lower tax bracket now, contributing to a TFSA may be better as you will pay taxes on your current income but not on any future investment growth or withdrawals. The other factors listed (appropriate risk level, tax sheltering of investment income, and types of investment vehicles) are also important considerations, but they do not have as direct an impact on the decision between a TFSA and an RRSP as your tax bracket does.

Which of the Following Is an Important Factor to Consider