1. Personal Finance
What is better, an RRSP, or an Index Fund?
That's like asking if socks or shoes are better. You need both!
We see adverts from our banks saying, "buy an RRSP today!"
This means absolutely nothing.
An investor doesn't simply "buy" an RRSP and then they are all of a sudden investing.
Yes, there are tax benefits, but I will save that for another post.
It's what you buy when the money is INSIDE the RRSP that counts.
Think about it like this:
- Your socks are the account (RRSP/TFSA etc.) you put your feet into.
- Your shoes are the investments you buy.
- Buy some good shoes, and make sure they are great value (cost) - they will take you farther than you imagine.
An S&P500 Index Fund like the iShares IVV costs 0.03% and has averaged ~10% compounded returns.
PS. If you are considering to contribute to the RRSP, the deadline for RRSP contributions is February 29, 2023.
If you haven't maximized your TFSA yet, you should probably do that before you think about contributing to your RRSP.
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