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Registered Retirement Savings Plan - RRSP
What does it mean?
A Canadian financial planning instrument that allows contributions to be used in income tax deductions. The hope is that this will encourage people to save for their retirement.
In Other Words...
There are two major benefits of an RRSP:
1) You can deduct your contributions against your year's earnings. If your tax rate is 40%, every $100 put into an RRSP will save you from paying $40 in taxes.
2) You get a tax shelter from any capital gains or income earned inside of an RRSP. This means that, over the long run, you can truly put your money to work for you through compounding.
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Related Terms
Canada Pension Plan | Capital Gains | Clone Fund | Income Tax | Pension Plan
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