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Investing basics
Investment account types in Canada

Investment account types in Canada

Tyler Wade

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In Canada, there are two general types of account where you can hold investments:

  • Registered accounts, also known as tax-advantaged accounts, are registered with the government and allow you to invest and grow your money while also saving on taxes.
  • Non-registered accounts don’t offer tax advantages but have other benefits such as no contribution limits, no withdrawal restrictions, and some other tax efficiencies. 

The focus of this page is on maximizing the various registered accounts. Once those are taken care of, we'll delve into more benefits of non-registered accounts. 

Key takeaways

Each registered account has unique tax benefits, so choosing the right mix can help maximize savings and minimize taxes throughout your life.

  • RRSP, TFSA, and FHSA are the most versatile.
  • RESP and RDSP provide government incentives.
  • LIRA, LIF, and RPPs are for pension-style retirement savings.
  • DPSP and PRPP benefit employees in group savings plans.

Registered accounts in Canada (types of investment accounts)

Who is the TFSA for?

A TFSA can help grow your savings for short- or long-term financial goals. You can save for a vacation, a car, home purchase, add to retirement savings, supplement your income or anything else you decide.

What are the benefits of the TFSA?

The investments in a TFSA grow tax-free, so you won’t pay tax on the capital gains, dividends and interest you accumulate.

There’s also no tax on withdrawals and withdrawals create new contribution room.

How does the TFSA work?

  • Contribution room: There’s a limit on the amount you can contribute without penalty. If you don’t use all your contribution room during a given year, that amount is carried forward and increases your contribution room in the following year.
  • Age: New immigrants that are 18 (or 19 in certain provinces and territories) and older can immediately open a TFSA in the year they arrive in Canada.
  • Taxes: You won’t get a tax deduction for your contribution, but there’s no tax on income or growth in the plan, and funds and can be withdrawn tax-free at any time. 

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Who is the RRSP for?

The RRSP is mainly used to save for retirement.

What are the benefits of the RRSP?

You may be able to claim a tax deduction for contributions you make to an RRSP. This may reduce the amount of tax that is payable.

In an RRSP, there’s no tax on income or growth earned on investments in the plan.

An added benefit is you may be able to borrow from an RRSP to help buy a home or pay for post-secondary education.

How does the RRSP work?

You may be able to claim a tax deduction for contributions, up to your RRSP contribution room that is calculated as 18% of earned income in the previous year with a maximum of $31,560 for 2024 ($32,490 for 2025), subject to any pension adjustments, plus any unused contribution room from prior years.

When you eventually withdraw money from the RRSP, usually during retirement, the money is taxed as income.

RRSP-eligible investments

An RRSP (Registered Retirement Savings Plan) can hold a variety of investments to help you grow your retirement savings while deferring taxes. Here’s what’s eligible:

1. Stocks & ETFs

  • Canadian & U.S. stocks traded on designated exchanges (TSX, NYSE, NASDAQ, etc.).
  • ETFs (Exchange-Traded Funds) for diversification and passive investing.
  • Related reads: Best ETFs and Best stocks

2. Mutual funds

3. Bonds & fixed income

  • Government bonds (Canada Savings Bonds, provincial, municipal).
  • Corporate bonds from eligible issuers.
  • GICs (Guaranteed Investment Certificates) for low-risk, fixed returns.
  • Related reads: How to invest in bonds and Best GICs

4. Cash & Savings

  • RRSP savings accounts for liquidity while earning interest.

5. Alternative Investments

  • REITs (Real Estate Investment Trusts) traded on a stock exchange.
  • Mortgage-backed securities and certain structured investments.
  • Gold, silver and other commodities

6. Foreign Investments

  • Stocks, ETFs, and bonds from eligible global markets.
  • Some restrictions apply to foreign-held private securities.

What’s not eligible in your RRSP?

  • Cryptocurrency (unless held in certain ETFs).
  • Personal-use property (e.g., art, collectibles).
  • Private shares of companies not listed on a designated exchange.

By choosing tax-efficient investments like stocks, ETFs, and bonds, you can maximize your RRSP’s growth while deferring taxes until withdrawal.

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Who is the FHSA for?

The FHSA may make it easier to save for your first home purchase.

What are the benefits of the FHSA?

Qualified first-time homebuyers can claim a tax deduction for contributions to the plan, up to $8,000 per year and $40,000 in total. There is no tax on income or growth in the plan, and funds and withdrawals are tax-free when used to buy a qualifying first home.

How does the FHSA work?

There are some qualifications to be eligible to open an FHSA. There are also rules around when and how the money can be withdrawn, how it can be used and contribution limits.

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Who is the RESP for?

The RESP helps you save for your child’s post-secondary education.

What are the benefits of the RESP?

Up to $50,000 may be contributed during the lifetime of the student. Grants and bonds may be available from the Government of Canada and there is no tax on income or growth in the plan.

How does the RESP work?

When the income, growth, grants and bonds are withdrawn to pay for a student’s post-secondary education, it’s taxed in the student's hands. Students often have little or no income, so they may not owe tax on these withdrawals. Withdrawals of the RESP contributions are not taxable, though grants and bonds may need to be repaid if the student doesn’t attend post-secondary school.

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Who is the RDSP for?

An RDSP is designed to help Canadians with disabilities and their families save for long-term financial security. It’s ideal for individuals eligible for the Disability Tax Credit (DTC) who want to grow their savings with government grants and bonds.

What are the benefits of the RDSP?

  • Government contributions: The Canada Disability Savings Grant (CDSG) and Canada Disability Savings Bond (CDSB) can add up to $90,000 in lifetime benefits.
  • Tax-deferred growth: Investments inside an RDSP grow tax-free until withdrawn.
  • No annual contribution limit: There's no yearly cap, but the lifetime contribution limit is $200,000.

How does the RDSP work?

  • Contributions: Anyone can contribute to an RDSP with the holder’s consent. Contributions are not tax-deductible.
  • Withdrawals: Withdrawals are partially taxable and must start by age 60. Government contributions and investment earnings are taxed in the beneficiary’s name (typically at a lower rate).
  • Age eligibility: The account must be opened before age 49 to be eligible for government grants and bonds.

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Who is the LIRA for?

A LIRA is designed for individuals who have left a pension plan from a former employer and want to keep their retirement savings locked in until retirement.

What are the benefits of the LIRA?

  • Tax-deferred growth: Investments inside a LIRA grow tax-free until withdrawal.
  • Protection from early withdrawals: Unlike an RRSP, a LIRA generally cannot be cashed out before retirement, ensuring the funds remain for long-term use.
  • Can be converted into income: At retirement, a LIRA can be converted into a LIF (Life Income Fund) or an annuity to provide a regular income.

How does the LIRA work?

  • Contributions: You cannot contribute directly to a LIRA—funds must come from a pension transfer.
  • Withdrawals: Typically not allowed until at least age 55, and then only by converting to a LIF or an annuity.
  • Age limit: A LIRA must be converted into a LIF or annuity by the end of the year the holder turns 71.

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Who is the LIF for?

A LIF is for individuals who retire with a LIRA or locked-in pension funds and need to start drawing income while keeping their savings invested.

What are the benefits of the LIF?

  • Continued tax-deferred growth: Investments keep growing while withdrawals provide income.
  • Flexible withdrawals: Withdrawals must follow minimum and maximum limits set by the government, but you control how much you take out within that range.
  • Survivor benefits: In most cases, a LIF can be transferred to a spouse tax-free upon death.

How does the LIF work?

  • Contributions: A LIF is funded by transferring money from a LIRA or another locked-in pension plan.
  • Withdrawals: Must begin no later than age 72, following government-set limits.
  • Conversion: A LIF can be converted into an annuity for guaranteed income for life.

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Who is the RPP for?

An RPP is an employer-sponsored pension plan that helps employees save for retirement. It’s ideal for workers whose employers offer pension benefits.

What are the benefits of the RPP?

  • Tax-deductible contributions: Employer and employee contributions reduce taxable income.
  • Tax-deferred growth: Investments grow tax-free until retirement withdrawals.
  • Employer-matching potential: Many RPPs include employer contributions, increasing retirement savings.

How does the RPP work?

  • Contributions: Both employees and employers contribute (in defined benefit or defined contribution plans).
  • Withdrawals: Withdrawals are taxed and typically begin at retirement.
  • Portability: If you leave a job, RPP funds can often be transferred to a LIRA or another pension plan.

Who is the DPSP for?

A DPSP is an employer-sponsored plan where only the employer makes contributions to share company profits with employees.

What are the benefits of the DPSP?

  • Free money from your employer: Employees do not contribute—only employers do.
  • Tax-deferred growth: Investments grow tax-free until withdrawal.
  • Portability: When leaving a company, DPSP funds can be transferred to an RRSP, RRIF, or annuity.

How does the DPSP work?

  • Contributions: Employers can contribute up to 18% of an employee’s salary, subject to a maximum annual limit.
  • Vesting period: Some employers require a waiting period before employees own the funds.
  • Withdrawals: Withdrawals are taxable, and funds can be moved into an RRSP to continue tax deferral.

Who is the PRPP for?

A PRPP is for self-employed individuals and small business employees who want a low-cost retirement savings plan.

What are the benefits of the PRPP?

  • Low management fees: Because PRPPs pool investments, costs are lower than many private retirement plans.
  • Tax-deferred growth: Contributions reduce taxable income, and investments grow tax-free until withdrawn.
  • Flexibility for employers: Small businesses can offer a group pension option without high administrative costs.

How does the PRPP work?

  • Contributions: Employees and self-employed individuals contribute, with optional employer matching.
  • Withdrawals: Funds are locked in until retirement and taxed when withdrawn.
  • Portability: If you switch jobs, PRPP funds stay in the plan or can be transferred to another retirement account.

Each registered account serves a unique purpose, from retirement savings (LIRA, LIF, PRPP, DPSP) to disability support (RDSP) and employer-sponsored pensions (RPP, DPSP). Choosing the right account depends on your financial situation, job benefits, and retirement goals.

Non-registered investment account

A non-registered investment account gives you the freedom to invest without contribution limits or withdrawal restrictions. While it doesn’t offer the tax-sheltering benefits of RRSPs or TFSAs, it provides flexibility and tax-efficient growth on capital gains and Canadian dividends.

If you've maxed out your registered accounts or want full control over your investments, a non-registered account can be a powerful tool to build wealth.

1. No contribution limits

  • Unlike RRSPs and TFSAs, non-registered accounts have no contribution caps. You can invest as much as you want without worrying about maxing out a limit.

2. No withdrawal restrictions

  • You can withdraw funds anytime without penalties. Unlike RRSPs, which are taxed on withdrawals, and TFSAs, which have re-contribution rules, non-registered accounts provide complete liquidity.

3. Tax efficiency for capital gains & dividends

  • Only 50% of capital gains are taxable, making it more tax-efficient than fully taxable interest income.
  • Canadian dividends receive a tax credit, reducing your overall tax bill compared to earning interest or salary income.

4. No forced withdrawals

  • Unlike an RRSP that must be converted to a RRIF by age 71 (which then forces annual withdrawals), a non-registered account has no mandatory withdrawal rules.

5. Better for high-income earners

  • If you’ve maxed out your RRSP and TFSA, a non-registered account lets you keep investing without tax-sheltered constraints.

6. Ideal for estate planning

  • A non-registered account doesn’t require a spousal rollover or forced taxation at death, unlike RRSPs, which are deemed disposed of upon death.

7. Use for leverage & margin accounts

  • Non-registered accounts allow margin investing, where you can borrow against your investments to increase buying power.

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When a non-registered account makes sense:

  • You’ve maxed out your RRSP & TFSA. Registered accounts like RRSPs and TFSAs offer tax advantages, so they should be your first priority. But contribution limits can be restrictive. Your RRSP contribution rom is based on 18% of your prior year's earned income (i.e. salary, side hustle, etc.) up to a maximum of $32,490 in 2025. The TFSA annual limit in 2025 is $7,000. Any unused contribution room carries forward. Once you've hit these limits and caught up to previous years, a non-registered account allows you to keep investing without worrying about caps or penalties. 
  • You want more flexibility with contributions and withdrawals. Unlike TFSAs and RRSPs which have max limits, and RRSPs which have tax consequences on withdrawals, a non-registered account has unlimited deposits and withdrawals, there are no age restrictions and no mandatory withdrawals (like when you have to convert your RRSP into a RRIF by age 71).
  • You’re investing in capital gains-focused assets (stocks, ETFs). Capital gains receive preferential tax treatment in Canada. Only 50% of your realized capital gains are taxed at your marginal rate, making it one of the most tax-efficient forms of investment income. Stocks and ETFs are particularly tax-efficient in non-registered accounts because they generate capital gains rather than interest income. Canadian dividends from eligible companies receive a dividend tax credit, further reducing tax liabilities. Foreign dividends and interest income, however, are fully taxable, making them less ideal for non-registered accounts.If you can't shelter these in a TFSA, at least you can avoid a heavy tax-burden. 
  • You have a long investment horizon and want to defer taxes on capital gains.  With a buy-and-hold strategy, you control when you trigger capital gains taxes. Unlike RRSPs, where all withdrawals are fully taxable as income, a non-registered account lets you: Defer capital gains taxation until you sell an asset, keeping more money invested and compounding over time, strategically plan withdrawals to minimize your tax hit in lower-income years or retirement and offset capital gains with capital losses (tax-loss harvesting), reducing your overall tax burden.

While non-registered accounts don’t offer the same tax sheltering as RRSPs or TFSAs, they provide unmatched flexibility, making them a strong choice for well-diversified investors.

A non-registered account is an essential tool for investors who’ve outgrown the limitations of RRSPs and TFSAs. It offers full control over contributions, withdrawals, and tax planning while providing preferential tax treatment on capital gains and Canadian dividends. If you're serious about investing beyond registered accounts, a well-structured non-registered portfolio can be a smart way to grow wealth efficiently.

FAQ

  • What is an investment bank account?

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    An investment bank account isn’t a traditional bank account — it’s an account used to buy and hold stocks, ETFs, bonds, and other investments. It can be registered (like an RRSP or TFSA) or non-registered. Unlike savings accounts, it’s designed for long-term growth, not just cash deposits.

  • Are investment accounts liquid assets?

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    Yes, investment accounts can be liquid, but it depends on the assets inside. Cash, stocks, and ETFs can be sold quickly, making them highly liquid. However, assets like bonds, GICs, and real estate funds may take longer to access, making them less liquid.

  • Which investment account should I open?

    +

    The best account depends on your goals. Open an RRSP for retirement savings with tax deferral. Open a TFSA for tax-free growth for any goal (but retirement is a good focus), TFSAs are more liquid than RRSPs since you can withdraw anytime. Open an RESP to save for your child's education. Open an FHSA to save for your first home.

  • How much to open an investment account?

    +

    Most online brokers let you open an account with $0, but you’ll need funds to start investing. Some managed accounts and robo-advisors require a minimum deposit, usually between $500 and $1,000.

  • Are investment account fees tax deductible?

    +

    Some fees are tax-deductible, such as advisory fees for non-registered accounts. However, fees for RRSPs, TFSAs, and trading commissions are not deductible. Always check with a tax professional.

  • Are managed investment accounts worth it?

    +

    A managed account can be worth it if you want professional guidance and don’t have time to self-manage. However, management fees (MERs) eat into returns, so ensure the benefits (like diversification and tax efficiency) outweigh the costs.

  • Can a non-resident open an investment account in Canada?

    +

    Yes, but restrictions apply. Many brokers require Canadian residency and a Social Insurance Number (SIN). Some firms allow non-residents to invest, but tax treaties and reporting rules vary.

  • Are investment accounts insured in Canada?

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    Yes, but only the cash portion is covered. The Canadian Investor Protection Fund (CIPF) protects up to $1 million in case of brokerage failure, but market losses are not insured.

Tyler Wade Personal finance content strategist & writer

Tyler Wade has worked in personal finance for over 5 years writing for brands like Ratehub, Forbes, KOHO, and now Money.ca.

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