A Registered Retirement Savings Plan (RRSP) is a retirement account that’s existed since 1957. RRSPs were introduced by the government to help Canadians save for retirement. The main benefit of RRSPs is that tax on RRSP contributions is deferred until retirement.
What Makes an RRSP Halal?
The RRSP is just an account with some tax rules around it. It is how the money that is deposited into this account gets invested that will make it halal or not. The focus here should not be the account type but the underlying investments. As long as that cash is being used to buy Shariah-compliant investments such as the Manzil Mortgage Fund then you should be able to sleep peacefully at night.
What are the Benefits of an RRSP
It's free money
Every dollar you contribute to your RRSP is tax- deductible. In other words, you pay less income tax.
Your money grows tax-free
As long as your money sits in your RRSP, it grows tax-free
Retired, but empowered
By planning your retirement properly, you empower yourself to be an active and helpful member of society despite your old age. After all, age is just a number!
Save for future you
As the saying goes, "Those who don't plan, have planned to fail." Putting away some money for the future is the smart and responsible thing to do.
Pay less tax in the future
You're only taxed on your RRSP when you withdraw your money from it, typically, when you retire and your tax rates are lower.
The 8th wonder of the world
Compounding is sometimes referred to as the 8th wonder of the world because of its incredible power. The earlier you start investing, the more money you make.
Types of RRSP
There are different types of RRSP accounts you can choose from.
A Spousal RRSP (Registered Retirement Savings Plan) is a savings plan where you can contribute money each year and save for your spouse's retirement.
A Group Registered Retirement Savings Plan (GRSP) is very similar to an RRSP. It's set up by an employer for their staff as an added work benefit. The plan acts as an incentive for new hires.
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