5 ways to grow your money

by | Aug 1, 2023 | Finance and Business

As you likely know, there are a number of government programs designed to help Canadians save for their retirement and other big life events. To help grow your money, consider contributing your quarterly Climate Action Incentive payment to one or more of the four registered plans below.

First off – what is the Climate Action Incentive payment (CAIP)?
CAIP is a federal program that provides most Canadians with quarterly payments to offset the cost of the government’s pollution pricing. Residents of Alberta, Saskatchewan, Manitoba, Ontario, Newfoundland and Labrador, Nova Scotia and Prince Edward Island receive these quarterly tax-free payments. You don’t need to apply for the program. Simply file your taxes every year. If you’re entitled to receive the CAIP, the next quarterly payment will be on October 15.

Find out more about the program at canada.ca/cai-payment

Here’s a brief overview of four types of accounts that will help the investments you make today grow for the future.

Accounts that might be available to you:

Registered Retirement Savings Plans (RRSPs)
RRSPs are probably the accounts you’re most familiar with. After all, at the beginning of every year, we’re inundated with ads reminding us of the deadline for contributing to them.

When you make a contribution to your RRSP within your limit and choose to claim the full deduction, you could get a dollar-for-dollar reduction on your annual income at tax time. In many cases, you may even lower your income enough that you get a refund on your taxes.

When the time comes to withdraw funds from your plan, you will report that money as income for the year it is withdrawn.

Tax-Free Savings Accounts (TFSAs)
TFSAs work a bit differently from RRSPs. If you contribute to a TFSA, you don’t get any deduction on your income tax and benefit return. Instead, when the time comes to withdraw funds from your TFSA, you do not have to report that money as income, including any gain in value your investments make.

Registered Education Savings Plans (RESPs)
For parents wanting to save for their children’s post-secondary education, RESPs are an excellent option. Like TFSAs, RESPs provide a tax-sheltered investment program that is intended for growth. As a bonus, the government contributes to your plan with Canada Education Savings Grant payments.

First Home Savings Accounts (FHSAs)
New in 2023, FHSAs are designed to help people save for their down payment on a home. They are open to residents of Canada who are 18 or older and not more than 71 years of age on December 31 of the year, and who are first-time home buyers.

FHSAs combine the tax-deductible aspect of RRSPs with the tax-free growth of a TFSA.

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