When to Start Contributing to Your RRSP, TFSA, and RESP
contributing to your RRSP, TFSA, and RESP

Are you looking for a way to save up some extra money this year? Have you been wondering when is the best time to start contributing to your Registered Retirement Savings Plan (RRSP), Tax-Free Savings Accounts (TFSA), and Registered Education Savings Plans (RESPs)?

You’re in luck!

Today, we’re here to discuss the advantages of contributing to your RRSP, TFSA, and RESP as early as possible (both in life and in each calendar year). We understand that it can be difficult navigating your financial options – so let us help get you started!

RRSPs, TFSAs, and RESPs are all important investment vehicles.

Before we get into it, let’s talk about the value of each of these plans / accounts. Registered Retirement Savings Plans (RRSPs), Tax-Free Savings Accounts (TFSAs), and Registered Education Savings Plans (RESPs) are all important investment vehicles for a variety of reasons. RRSPs offer tax advantages that allow you to defer taxes on investments until retirement, when your income is likely lower and thus the tax rate would be lower. This can also help reduce your overall taxable income in the current year, which could save you money in the long run. TFSA’s provide tax-free growth of investments, meaning that any growth within the account is not subject to taxation. This is beneficial for those who are trying to build wealth over time, since they will not have to pay taxes on their earnings or capital gains. Lastly, RESPs offer matching grants from the government, allowing families to save up for educational expenses without having to pay taxes on those funds until they are withdrawn. These benefits make these investment vehicles important tools for building long-term wealth while taking advantage of tax incentives.

Beyond the tax savings benefits, holding multiple accounts in different places may help you diversify your portfolio by providing access to different asset classes such as stocks, bonds and mutual funds. This can help manage risk by spreading investments across multiple asset classes and can be especially beneficial during volatile markets when one type of investment may outperform another. Additionally, using these different accounts allows individuals to take advantage of compounded interest which can significantly increase the potential return on their investment over time if managed properly. They offer a great way for individuals looking to maximize their returns while minimizing their exposure to taxation in order to secure a more secure financial future.

Why should you start contributing to your RRSP, TFSA, and RESP as soon as possible?

1. Give your money more time to grow.

The earlier you contribute to RRSPs, TFSAs, and RESPs, the more time your money has to grow because of the power of compound interest. Compound interest is when a percentage of the original principal or accrued interest is added to the original principal to calculate interest on future payments. This means that as time goes on, and you continue to contribute to these types of accounts, your initial contribution will earn even more interest as time passes. For example, if you start contributing $100/month into an RRSP at 25 years old, in 10 years that $100 will have grown significantly more than for someone who started contributing $100/month at 35 years old. See the below chart for a visual representation of the difference it makes to begin contributions early:


Contributing to Your RRSP, TFSA, and RESP

Chart Source: Business Insider

2. Reduce your investment risk.

Another benefit of contributing earlier rather than later is that by giving your money more time to grow through investments within an RRSP or other account, it can reduce risk associated with investing. Over long periods of time, stock markets generally move up in value since investments are able to weather market downturns over longer periods of time compared to shorter investment windows. As such, by investing in an RRSP early on you can enjoy a larger return with potentially less risk involved.

3. Take advantage of tax deductions.

Additionally depending on your age, there may also be certain tax deductions available that further incentivize earlier contributions towards retirement savings plans like RRSPs and TFSAs. For example those under the age of 18 may be eligible for additional funds through government programs like the Canada Education Savings Grant where they can receive up 20% additional funding for every dollar contributed towards their RESP account up until a certain limit each year – giving them a total maximum grant amount per child up to $7200!

All this considered, it’s easy to see why contributing early is beneficial not just for saving money but growing it too – with more time for compounding returns and tax incentives tied into certain accounts. It pays off significantly to start your contributions as early in life as possible.

Why is it best to start your contributions at the beginning of each year?

Contributing to RRSPs, TFSAs, and RESPs early in the year offers a host of benefits that make it an attractive financial choice. Most importantly, by providing individuals with a tax-deferred or tax-free way to save for retirement or their children’s education, these savings plans can offer significant returns over time.

1. RRSPs: Reduce your taxable income for the calendar year and accumulate more interest.

When it comes to RRSPs, contributing early in the year has the potential to reduce your taxable income for the calendar year by as much as 18% (the amount you contribute). This means that not only do you have less taxable income for the year, but also more money in your pocket – potentially reducing the amount of taxes owed at tax time. Additionally, contributions made early in the year have more time to accumulate interest before any withdrawals are needed. Over time this can add up significantly, making a larger difference than waiting until later in the year to invest.

2. TFSAs: Save without increasing your taxes due, and maximize your annual investment returns.

TFSAs also provide an attractive option for those looking to save money without increasing their taxes due. Contributions made into a TFSA are not deductible when filing taxes; however any withdrawals are not considered taxable income either. This makes them especially useful for emergency funds or short-term savings goals – since no taxes are paid upon withdrawal, there is no need to pay back taxes if you were unable to complete your savings goal during the year. Furthermore, contributions made early in the year allow investments more time to grow and generate returns over time; this can greatly benefit one’s finances in both short and long-term scenarios.

3. RESPs: Start early in the year to save (and grow) your wealth while minimizing taxes.

RESPs are another great way to save while minimizing taxes due when it comes time to file your return. As with RRSPs and TFSAs, contributing early in the year allows more time for investments within an RESP account to grow and accumulate returns – giving parents additional funds when it’s finally time for their child’s post-secondary education costs. Additionally like a TFSA, any withdrawals from an RESP are not counted as taxable income; however for RESPs there is also government grant money available which can help offset some of the costs associated with higher education expenses – up to 20% of lifetime contributions into an RESP per beneficiary (with a maximum grant of $7200 total).

4. Contributing early in the year helps you start the new year on the right foot and stay disciplined with your savings goals.

Contributing to RRSPs, TFSAs, and RESPs early in the year helps you stay disciplined with your saving goals because it gives you a clear goal to work towards and provides an incentive to put money away. Additionally, having a set amount that you are contributing each month allows you to track your progress more effectively. This way, you can better monitor how much you have saved and decide if you need to step up your contributions or if you can afford to relax a bit. Also, knowing that the money will be invested for long-term growth means that there is less chance of it being spent on other items or activities.

Furthermore, early contributions provide an invaluable psychological benefit as well – when you take action towards a financial goal, it creates positive momentum and helps you develop good habits. Setting aside money at regular intervals reinforces commitment and encourages you to stick with your plans.


It is important to understand the various types of investments that are available to Canadians, and how each one can help you reach your financial goals. RRSPs, TFSAs, and RESPs are all excellent tools that can provide you with a great return on investment if you start contributing early and frequently. As we head into 2023, note that the optimal time to start contributing to your RRSP, TFSA, and RESP is early in the calendar year.

If you have any questions, would like more information on how to begin investing in these accounts, or are looking for any other advice related to personal finance, please schedule a consultation with Evergreen Wealth Advisory. Our team looks forward to helping you get started on the path to financial success.