We all know that age is just a number. And this means that once you reach retirement age, you have to plan for a new era of your life.
One of the essential things you need to plan for is your financial independence after retirement.
A great way to gain financial independence after retirement is by contributing to a Registered Retirement Savings Plan (RRSP).
RRSPs have been around in Canada for decades and have proven to be a wonderful way of saving for retirement income.
But what is an RRSP? What are the various types and the best RRSP rates in Canada?
This article will explain everything you need to know about RRSPs and will also provide you with the best RRSP rates in Canada.
So let’s get started!
Table of Contents
What is an RRSP?
A Registered Retirement Savings Plan (RRSP) is a savings vehicle which is registered with the federal government of Canada to which you can make contributions towards your retirement.
When you contribute money to an RRSP, it goes into a special type of bank account called an RRSP account.
The funds are deposited into this account and they can be invested in various types of investments.
The plan has no tax implications when you contribute to your RRSP. In other words, you don’t pay taxes on the money that you put into your RRSPs until it’s withdrawn at retirement age or after a set number of years.
Also, the money you have contributed to your RRSP will earn interest until you withdraw it from the plan or die. You can withdraw this money at the age of 71.
Types of RRSPs
There are three types of RRSPs and understanding each of them will help you make an informed decision. Here are the three types of RRSPs:
Individual RRSP
An RRSP account that is opened in your name is known as an individual RRSP. Because the account is registered in your name, you own the investments kept in the RRSP as well as the tax benefits related to them.
The main benefit to an individual RRSP is that you have complete control over your contributions, which allows you to make conscious investment choices.
Spousal RRSP
A spousal RRSP and it’s when a spouse makes contributions on behalf of the other who may not be eligible to make contributions themselves.
The benefitting spouse possesses the investments in the RRSP, while the contributor gets the tax deduction.
Group RRSP
These funds are referred to as administered plans because they are managed by a third party. They are invested by employers on behalf of the employees.
You’ll probably just have a few options when it comes to the investments made in the plan. If you’re looking for more control over your investments, you should consider opening an individual RRSP.
10 Best RRSP Rates in Canada
There are several financial institutions that offer different types of RRSPs. The most common ones are banks and credit unions.
However, not all of these financial institutions offer these accounts with the same rates or features.
Some stand out for their competitive rates. Here are some of the best RRSP rates in Canada:
1. WealthOne RRSP Savings Account
- Interest Rate: 3.00%
- Minimum Investment: No minimum investment requirement
- Monthly Fees: No monthly fees
WealthOne RRSP Savings Account has one of the best RRSP rates in Canada. With the account, you can get an interest rate of up to 3.00%.
The WealthOne RRSP Savings Account has no monthly fees or minimum balance requirements.
Also, you can make unlimited transactions with your RRSP Savings Account at no cost. Your deposits in the account are also insured by the Canada Deposit Insurance Corporation (CDIC).
2. AcceleRate Variable RRSP
- Interest Rate: 2.85%
- Minimum Investment: No minimum investment requirement
- Monthly Fees: No monthly fees
The AcceleRate Variable RRSP is an account that keeps your money interest tax-free while giving you the no-fee convenience of a savings account.
There are no monthly fees and minimum balance requirements with the account. Your deposits in the account are insured by the Deposit Guarantee Corporation of Manitoba (DGCM).
Also, no matter what day of the month you make a deposit in your AcceleRate Variable RRSP account, interest will begin to accrue immediately.
3. Achieva RRSP Savings Account
- Interest Rate: 2.85%
- Minimum Investment: No minimum investment requirement
- Monthly Fees: No monthly fees
The Achieva RRSP Savings Account combines all of the tax advantages of an RRSP with the high-interest rate of Achieva’s standard daily interest savings account.
You can make contributions to the account at any time and your deposits are covered by the Deposit Guarantee Corporation of Manitoba (DGCM).
Also, to make monthly contributions more simple, an option is provided for you to create a pre-authorized contribution plan to have money transferred to your Achieva RRSP automatically.
4. EQ Bank RSP Savings Account
- Interest Rate: 2.00%
- Minimum Investment: No minimum investment requirement
- Monthly Fees: No monthly fees
The EQ Bank RSP Savings Account is another great RRSP account. It has no monthly fees and minimum balance requirement.
Your deposits in the account are insured by the Canada Deposit Insurance Corporation (CDIC).
Also, opening an EQ RSP savings account is very fast and easy. You can easily open one using the bank’s online banking portal or mobile app in a few minutes.
5. Hubert Financial RRSP Savings Account
- Interest Rate: 2.85%
- Minimum Investment: No minimum investment requirement
- Monthly Fees: No monthly fees
Hubert Financial RRSP Savings Account has one of the best RRSP rates in Canada. You can get an interest rate of up to 2.85% on the account.
The account doesn’t have a minimum balance requirement and it doesn’t charge monthly fees. The interest you earn on the account is calculated daily and paid every month.
Also, your deposits in the account are guaranteed 100% by the Deposit Guarantee Corporation of Manitoba (DGCM).
6. Alterna Bank RRSP eSavings Account
- Interest Rate: 2.00%
- Minimum Investment: No minimum investment requirement
- Monthly Fees: No monthly fees
Alterna Bank RRSP eSavings Account is another great RRSP account. The account has no monthly fees or minimum balance requirement.
Also, when you make contributions into the account, the Canada Deposit Insurance Corporation (CDIC) insures your deposit. This means your money’s security is guaranteed.
7. Motive Financial RRSP Savings Account
- Interest Rate: $0 to $2,500 = 0.250%, $2,500.01 and above = 2.600%
- Minimum Investment: No minimum investment requirement
- Monthly Fees: No monthly fees
Motive Financial RRSP Savings Account is another great account with no minimum balance requirement and monthly fees.
The account has an interest rate that ranges from 0.250% to 2.600%. This means the interest you will earn depends on the amount you contribute.
Also, your money in the account is secured because it is insured by the Canada Deposit Insurance Corporation (CDIC).
8. MAXA Financial RRSP
- Interest Rate: 2.60%
- Minimum Investment: No minimum investment amount
- Monthly Fees: No monthly fees
The RRSP account from MAXA Financial offers a simple option to make consistent payments toward your retirement objective.
You can conveniently send funds from your MAXA High-Interest Savings account over the phone or online.
Your deposits are also 100% insured by the Deposit Guarantee Corporation of Manitoba (DGCM).
9. CIBC RRSP Daily Interest Savings Account RRSP
- Interest Rate: 2.60%
- Minimum Investment: $25
- Monthly Fees: No monthly fees
The CIBC RRSP Daily Interest Savings Account RRSP is a great account for you if you are looking for a short-term account for your RRSP savings.
The account offers an interest rate of 2.60% for a limited time and there are no monthly fees.
Although the account has a minimum investment amount of $25, you can take advantage of the high-interest rate.
10. Motusbank RRSP savings account
- Interest Rate: 1.85%
- Minimum Investment: No minimum investment requirement
- Monthly Fees: No monthly fees
The Motusbank RRSP savings account is an ideal account for your short-term RRSP savings needs.
Although the account offers a regular interest rate of 1.85%, you can get a promotional interest rate of up to 3.30% on your deposits.
Also, eligible funds in the account are insured by the Canada Deposit Insurance Corporation (CDIC) up to the maximum of $100,000.
How to Choose the Best RRSP Rate in Canada
With the right investments, an RRSP can help you achieve your retirement goals more quickly.
However, if you don’t know what kind of account is best for you, it can be difficult to choose the right provider or account.
When choosing the best RRSP rates in Canada, the most important thing is to find one that fits your needs.
For you to choose the best RRSP, you have to determine what you are looking for in an RRSP account.
Once you can determine what you are looking for in an RRSP, you can then compare the available options. You can start by comparing the following:
- Interest rate
- Fees
- Minimum investment
- Security
What Kinds of Investments Can You Hold Inside an RRSP?
You can hold multiple investment types in an RRSP. Different types of investments will have different advantages.
The most common types of investments you can hold in an RRSP account include:
- Savings account: A savings account is an account where you can save money and earn interest on your savings. The interest earned on these accounts is usually compounded daily.
- Exchange-traded funds (ETFs): An ETF is an investment that tracks the performance of an index while also giving you access to that index at any time through your brokerage account. The main benefit of investing in an ETF is that it allows you to diversify your portfolio without having to worry about the underlying assets.
- Guaranteed investment certificates (GICs): A GIC is a type of investment that gives you comfort that if you invest your money, you will get a certain return. It is considered a safe investment because there is a guarantee of return on your investment.
- Stocks: These are the shares of companies that pay dividends. They may also have a profit-sharing feature that lets you share some of the profits with your RRSP account each year. Stocks can be risky because they fluctuate in value over time. So if you buy when the market is high, your investment could lose value quickly.
- Mutual funds: Mutual funds are managed portfolios that invest in various securities.
- Bonds: These are debt securities issued by governments and corporations with stable interest rates paid back at maturity (the end of the bond period).
How to Open an RRSP
The process of opening an RRSP account is not difficult. You can open an RRSP online at a bank or credit union branch.
To open an RRSP account, you will be asked to fill out a form. This can include your age, marital status and occupation.
Also, you will be asked to provide your investment goals, level of investment knowledge, and also provide information about your beneficiary.
After you’ve completed the application, the institution will take some time to review it before processing the application.
Once your application is approved, the provider will send you a confirmation letter that contains all the details of the account.
Then, you’ll be required to pay a deposit and make other arrangements for managing your account with the provider.
READ ALSO: Simple Ways to Save Money That Really Work
Final Thoughts on the Best RRSP Rate in Canada
There’s no denying the fact that RRSPs can be a useful savings tool for individuals. But not all types of RRSP accounts may be right for you.
There are many options when it comes to what type of RRSP account you can choose from.
As a result, the best RRSP rate in Canada depends on your financial situation, what kind of retirement goals you have, and how much risk you’re willing to take on.
So take some time to look at the list above and find one that meets your financial needs.
Hopefully, this article has helped you to choose the best RRSP account for your retirement savings.
If it has, please share it with your friends and family that may also be looking for the best RRSP rates in Canada.
