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Treat yo'self: The most expensive thing you've ever bought
We asked five Atlantic Canadians about the most expensive, non-essential item they’ve ever bought.
When it comes to all things investing, it can feel like you’re learning another language. We broke down some of the basics to help you feel fluent in no time.
Glossary of Terms: Investing
Investment
Something that is bought with the hope that it will generate income or grow in value in the future.
Non-registered Investment
An investment, such as a Guaranteed Investment Certificate (GIC) or a Mutual Fund that is not held in a savings plan registered with the Canada Revenue Agency (CRA) like a Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP). Growth on a non-registered investment is considered taxable income.
Registered Investment
An investment, such as a Guaranteed Investment Certificate (GIC) or mutual fund held inside of a savings plan registered with the Canada Revenue Agency (CRA). Examples include a Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP). Growth on registered investments is not taxable.
Guaranteed Investment Certificate (GIC)
A type of investment that pays you an agreed-upon rate of return over a fixed period with the promise that your invested amount will not decrease. Since the rate of return and the original investment do not fluctuate, GICs are considered low risk.
Registered Retirement Savings Plan (RRSP)
A savings plan registered with the Canada Revenue Agency (CRA) designed to help build money for retirement. Money that is put into an RRSP, along with any income it earns, grows tax-free until it is withdrawn.
Tax-Free Savings Account (TFSA)
A savings plan that is registered with the Canada Revenue Agency (CRA) that allows you to hold cash or other investments (ex. GICs, mutual funds). You can only put a certain amount of money into a TFSA each year and this limit is determined annually by the government. Any money held inside of a TFSA grows tax-free and the growth is never taxed, even once it’s taken out.
First-Home Savings Account (FHSA)
The First Home Savings Account (FHSA) is a tax-free savings account designed to help you save for your first home. The FHSA combines the tax-deductible benefits of an RRSP with the tax-free withdrawals of a TFSA. Contributions to this account can be up to $8,000 per year, for a maximum of $40,000 over 15 years that can be put towards the purchase of a qualifying home.
Now that you’ve got the basic lingo, if you’re looking for more tips, check out our article on Investing 101.