Find the Best RRSP GIC Rates
Thinking about opening a RRSP? Let Ratehub.ca help you find the best RRSP GIC term and rate.
A registered retirement savings plan (RRSP) is a government-approved account that allows Canadians to plan for retirement. First introduced in 1957, RRSPs provide a way for individuals to save and invest their money in a tax-efficient manner. Annual contributions to an RRSP can be used as a tax deduction, which reduces the amount of tax a person will pay on their income. In addition, all capital gains and dividends aren’t taxed a long as the money remains in the RRSP.
Thinking about opening a RRSP? Let Ratehub.ca help you find the best RRSP GIC term and rate.
Every year, Canadians with “earned” income (salaries or wages from a job) who file a tax return may contribute money to an RRSP. The contribution limit is defined as either 18% of your previous year’s earned income or a specified amount set by the Canada Revenue Agency (CRA), whichever is less. Here are the annual contribution limits since 1991:
Year | Contribution Limit |
---|---|
2020 | $27,230 |
2019 | $26,500 |
2018 | $26,230 |
2017 | $26,010 |
2016 | $25,370 |
2015 | $24,930 |
2014 | $24,270 |
2013 | $23,820 |
2012 | $22,970 |
2011 | $22,450 |
2010 | $22,000 |
2009 | $21,000 |
2008 | $20,000 |
2007 | $19,000 |
2006 | $18,000 |
2005 | $16,500 |
2004 | $15,500 |
2003 | $14,500 |
2002 | $13,500 |
2001 | $13,500 |
2000 | $13,500 |
1999 | $13,500 |
1998 | $13,500 |
1997 | $13,500 |
1996 | $13,500 |
1995 | $14,500 |
1994 | $13,500 |
1993 | $12,500 |
1992 | $12,500 |
1991 | $11,500 |
This contribution may then be used as a deduction when filing for the previous year’s taxes. For example, if you contribute $2,000 to your RRSP, your income is then reduced by $2,000 for the purpose of calculating the tax you owe.
Canadians are permitted to hold a wide variety of investments in their RRSPs. Some common RRSP investments include:
RRSPs may remain open until a person reaches the age of 71. At this point (by the end of the calendar year), they must be closed or converted into what’s known as a registered retirement income fund (RRIF).
There are five steps to opening an RRSP:
An RRSP may be opened at most financial institutions in Canada. These include banks, trust companies, insurance companies, investment firms, and credit unions/caisses populaires.
With a wide variety of investments to choose from, there are many ways to structure an RRSP. As a general rule, you’ll want to have a mix of assets, such as stocks, bonds, and cash. You can buy either individual stocks and bonds. Or you can purchase a basket of them in an ETF, mutual fund, or index fund.
The younger you are, the more risks you can probably afford to take with money in your RRSP. However, as you near retirement you’ll probably want to shift your portfolio to safer investments to be sure you’ll have the money when you reach the age of 71.
There are three main benefits of having an RRSP:
RRSPs are a great way to save. They save you money on your taxes today, and allow you to efficiently save for your retirement. By starting early and making steady contributions, you’ll build up a nest egg you can rely on when you reach your golden years.