The Government of Canada has a vested interest in encouraging people to save. They have set up a number of programs to give Canadians financial incentives to save money for the future. Whether it’s for retirement, education or a first home, there are programs for you.
Registered Retirement Savings Plans (RRSPs)
RRSPs are a tax shelter that work by deferring taxes for years if not decades. They are designed to help you grow your investments without having to pay taxes on the gains while they stay within the RRSP. This enhances the power of compounding, as every dollar earned can be reinvested without having to pay tax (yet) on it. Over a period of 40 years, the full effect of compounding without having to pay any tax can greatly increase the size of the investment.