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This is important so check it out.
Canada has finally introduced a Roth style retirement account.
I have been waiting for this for the past 2 – 3 years since it was first introduced in the states.
It’s called a TFSA (Tax free savings account) and it comes out in January 2009.

The benefits to you and I:

• All earnings of any type within the TFSA are not taxed.
• Most common security types (stocks, mutual funds etc) are allowed to be purchased in account.

Unlike an RRSP the money you deposit into these accounts is after-tax money and there is a limit of $5000 / year.
The benefits are obvious… tax free capital gains from investing…

Now the long term strategy is to put money into the TFSA while you’re young and not making boat loads of money cause your tax rate is lower.
When you retire (hopefully with a higher standard of living than right now) you’ll probably withdraw more money per year than you’re earning now.
On an RRSP you would be taxed when you withdraw the higher sum at a higher rate.

Also, unlike an RRSP, if you withdraw early there is no charge because it’s simply a savings account.

My plan:
- Put $5000 per year into the TFSA until I’m in a high tax bracket at which point I’ll deposit into an RRSP
- Use the money to invest
- Skillfully withdraw money from both the TFSA and RRSP in the future to minimize my taxes

For a more detailed comparison please visit:
Morningstar’s TFSA vs RRSP comparison

Four Pillars Investing’s TFSA vs Roth IRA comparison