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What Happens When You Invest $100,000 in an RRSP, TFSA, or Taxable Account?
May 28, 2025 | Posted by: Kiruban Kana
If you're saving for the future—whether it's retirement, a home, or just financial freedom—where you invest matters just as much as how much you invest. Kiruban Kana
Let’s break down what happens when you invest $100,000 for 20 years, earning a 5% annual return. (A realistic, long-term average.)
RRSP (Registered Retirement Savings Plan)
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✅ Tax Deduction Today — reduces your taxable income now
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Growth — tax-deferred (you don’t pay tax while it grows)
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Withdrawal Tax — fully taxed as regular income when you take it out
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❗ Tax Impact: If you’re in a 30% tax bracket at retirement, you’ll pay 30% tax on the entire amount
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You keep ~$185,700 out of $265,330
TFSA (Tax-Free Savings Account)
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❌ No deduction up front
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Growth — 100% tax-free
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Withdrawal Tax — none, ever
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❗ Tax Impact: You can withdraw your full balance with zero tax
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You keep the full $265,330
Taxable (Cash/Non-Registered Account)
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❌ No tax deduction
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Growth — taxed along the way (interest, dividends, capital gains)
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Withdrawal Tax — pay capital gains tax on 50% of profits
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❗ Tax Impact: Approx. 15% effective tax on your gains = ~$12,400 in taxes over time
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You keep ~$252,930
Summary:
Account Growth Tax at Withdrawal Net After 20 Years
TFSA Tax-Free $0 $265,330 ✅
Taxable Taxed as you go ~$12,400 total $252,930
RRSP Tax-deferred 30% (or marginal tax rate) $185,700
Final Thoughts:
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TFSA: Best for tax-free long-term growth with flexibility
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RRSP: Great if you expect to retire in a lower tax bracket
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Taxable: Useful for overflow or short-term access
⚠️ Disclaimer: This is for informational purposes only. We’re not tax accountants. Please consult your tax lawyer or accountant before making any investment or tax decisions.
#TaxPlanning #RRSP #TFSA #WealthBuilding #FinancialLiteracy #InvestSmart #CoffeeAndMortgage #TaxTips #CanadaFinance #LinkedInFinance #MortgageBroker
Kiruban Kana
Ex-Banker | Vice President & Mortgage Agent Level II
C: 416-219-4820 | kiruban@coffeeandmortgage.ca
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