Which Investment Account in Canada Should You Prioritize First?

Prioritizing investment accounts depends on various factors and individual circumstances.

The introduction of the First Home Savings Account (FHSA) has added a new element to account prioritization, especially for first-time homebuyers.

For individuals with plans to purchase a home in the future, the FHSA may become the top priority due to its contribution limitations and tax benefits.

High-income earners may benefit the most from prioritizing their RSP and FHSA accounts to take advantage of tax deductions.

Individuals with uncertainty about their future plans may consider starting with a Tax-Free Savings Account (TFSA) for its flexibility.

Are there any fixed rules for account prioritization?

—There are no fixed rules as account prioritization depends on personal circumstances and future goals.

Does the introduction of the FHSA change the traditional account prioritization?

—Yes, the FHSA has introduced a new element that may shift the priority for individuals planning to buy a home in the future.

Should high-income earners prioritize their RSP or FHSA?

—Yes, high-income earners may benefit from prioritizing both their RSP and FHSA accounts to maximize tax deductions.

What should individuals with uncertain future plans prioritize?

—Individuals with uncertain future plans may consider starting with a TFSA for its flexibility.

What other factors should be considered in account prioritization?

—Other factors to consider include employer matches, financial goals, and investment strategies.

00:00Introduction to the topic of account prioritization in Canada.

01:00Discussion on the first scenario: if you have plans to purchase a home in the future, the First Home Savings Account (FHSA) may become the top priority.

06:53Explanation of the second scenario: if your employer offers a match, consider maximizing that match before focusing on other accounts.

10:09Analysis of the third scenario: if you are a high-income earner, prioritize your Registered Retirement Savings Plan (RSP) and FHSA accounts.

12:48Overview of the fourth scenario: if you are unsure about your future plans, start with a Tax-Free Savings Account (TFSA) for flexibility.

14:31Conclusion and advice on additional factors to consider in account prioritization.