There is a question most people do not think about until they are sitting in front of an account-opening screen: where exactly should this money go?
The same investment can produce very different results depending on the tax wrapper around it. Fortunately, Canada has some excellent options and the government is essentially offering free tax breaks to encourage use.
Accounts fall into two buckets: registered (government-linked, with tax benefits) and non-registered (no perks, no limits).
Tax-Free Savings Account (TFSA)
The TFSA is one of the most versatile accounts available to Canadians and for most people, it is the best place to start. It works for almost any goal, vacation, wedding or emergency fund.
Once you turn 18, you are eligible to open one. Each year, the government sets a contribution limit—in 2026, it is $7,000. Any growth inside a TFSA—whether that is dividends or a stock that doubles in value—is completely untaxed.
The contribution room is cumulative. If you turned 18 in 2009, when the TFSA launched, and have never opened one, you could have over $109,000 in available room today. You can confirm your exact room through your CRA My Account online.
Registered Retirement Savings Plan (RRSP)
The RRSP is the account you hear about every February and March, when financial institutions remind you to contribute before the tax deadline. There is a reason for that urgency: RRSP contributions reduce your taxable income for the year.
If you earn $80,000, contribute $10,000, you are only taxed on $70,000. You will eventually pay the tax during retirement but ideally at a lower rate since most people earn less then.
Early withdrawals are taxed as income, with two exceptions: the Home Buyers’ Plan (up to $60,000 for a first home, repayable over 15 years) and the Lifelong Learning Plan for education.
The RRSP tends to make the most sense once you are earning a substantial income—generally $50,000 or more—where the upfront tax deduction has real impact.
First Home Savings Account (FHSA)
The FHSA is the newest account on this list and it’s arguably the best deal the government has offered in years—especially for younger Canadians trying to enter one of the most expensive housing markets in the world.
Contributions are tax-deductible like a RRSP, and growth and withdrawals are tax-free like a TFSA — as long as the money goes toward your first home. Annual limit is $8,000, with a $40,000 lifetime cap.
The room does not build retroactively from age 18 like a TFSA. It only starts accumulating once you open the account. So if there is even a chance you will buy a home someday, open one now—even with nothing in it.
If you never buy, the funds roll into your RRSP penalty-free. No downside to opening early.
Registered Education Savings Plan (RESP)
The RESP is a bit different from the others—it is not opened for yourself, but for a child’s future education.
Parents (or grandparents, or anyone) can open a RESP on behalf of a child and the government tops it up. It matches 20 per cent of annual contributions up to $2,500 per year—that is a free $500 annually, just for contributing.
Given the power of compounding, starting an RESP at birth means nearly two decades of growth. It is one of the few accounts where someone else’s generosity can compound directly into a child’s future.
Registered Disability Savings Plan (RDSP)
The RDSP is a long-term savings plan to help people with disabilities who are approved for the Disability Tax Credit save for the future. When a plan is opened, grants and bonds from the Government of Canada can be provided to help with long-term savings.
You can contribute any amount of money to your plan at any time of the year as longs as you do not exceed the lifetime maximum of $200,000. For each eligible contribution you make, you will receive the matching grant in your plan.
For those eligible to receive a bond, you will automatically receive it into your plan every year. No contributions are needed to receive the bond.
For these accounts, there are no limits, no restrictions—but no tax benefits, either. Gains are taxed as capital gains, dividends or interest depending on the investment. Think of these as overflow: useful once your registered accounts are maxed, but not where you start.
So, Which Account Should You Open First?
If you are saving for a first home, open an FHSA today—even empty. Your room only accumulates from the date you open it. After that, a TFSA for general savings and flexibility. As your income grows, layer in RRSP contributions where the tax deduction starts making a real difference. Have kids? An RESP at birth. And if you have maxed all of the above, non-registered accounts are your next move.
The order matters as these accounts exist to reduce your tax burden. It is important to confirm your contribution limit with the CRA as overcontribution comes with tax penalties.
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