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Investment Umbrellas and Product Options

    I find people at times get confused with investment UMBRELLAS and PRODUCT OPTIONS.

    There are 3 main investment UMBRELLAS:

    1. RSPs – Retirement Savings Plans where you can defer taxes to a later date.  The premise is that when you put funds into an RSP you are at a higher tax rate then you withdrawal them.  Over my career I have found that is not always the case.  Also all those gains in your RSP aren’t eligible for the dividend tax credits or capital gains deduction you have to claim everything you withdrawal as income.  At age 71 you must convert all RSPs to RIFs, retirement income funds.  And you are required to start taking a prescribed minimum each year which can cause you to have an OAS (Old Age Security) clawback.  There are limits depending on your income.
    2. TFSA – Tax Free Savings Accounts grow tax free.  Contributions to TFSA are after tax income but growth is tax free.  There are contribution limits each year dictated by the federal government.  Contribution limits are cumulative and if you withdraw from your TFSA that same amount opens up replacement contribution room the following year.
    3. Non-Registered Investments.  There is no tax deferral and no tax free growth.  Depending on type of earnings you might qualify for a dividend tax credit or capital gains deduction.

    There are other specialized investment UMBRELLAS:

    • RESPs – Registered education savings plans
    • FHSA – First home savings account
    • RDSP – Registered disability savings plans

    Under each UMBRELLA there is a host of PRODUCT OPTIONS such as:


    An annuity is a type of investment contract that pays you income at regular intervals, usually after retirement.


    A bond is a certificate you receive for a loan you make to a company or government (an issuer). In return, the issuer of the bond promises to pay you interest at a set rate and to repay the loan on a set date.

    Canada Savings Bond (CSB)

    A Canada Savings Bond is a savings product issued and guaranteed by the federal government. It offers a minimum guaranteed interest rate. Canada Savings Bonds have a three-year term to maturity, with interest rates remaining in effect for that period. At the end of the period, the Minister of Finance announces the new rates based on prevailing market conditions. It may be cashed at any time and earns interest up to the date it is cashed.

    Canada Savings Bonds are only available through the Payroll Savings Program, which allows Canadians to purchase bonds through payroll deductions.

    Exchange traded fund (ETF)

    An exchange traded fund is an investment fund that holds assets such as stocks, commodities or bonds. Exchange traded funds trade on stock exchanges and have a value that is similar to the total value of the assets they contain. This means that the value of an exchange traded fund can change throughout the day.

    The risk level of an exchange traded fund depends on the assets it contains. If it contains high-risk assets, like some stocks, then the risk level will be high.

    Guaranteed investment certificate (GIC)

    A GIC is an investment that protects your invested capital. You will not lose money on the investment. GICs can have either a fixed or a variable interest rate.

    Mutual fund

    A mutual fund is a type of investment in which the money of many investors is pooled together to buy a portfolio of different securities. A professional manages the fund. They invest the money in stocks, bonds, options, money market instruments or other securities.


    A security is a transferable certificate of ownership of an investment product such as a note, bond, stock, futures contract or option.

    Segregated fund

    A pooled investment fund, much like a mutual fund, is set up by an insurance company and segregated from the general capital of the company. The main difference between a segregated fund and a mutual fund is the guarantee that, regardless of fund performance, at least a minimum percentage of the investor’s payments into the fund will be returned when the fund matures.


    A stock is a unit of ownership in a company which is bought and sold on a stock exchange. Stocks are also called “shares” or “equities”.

    Treasury bill (T-bill)

    A T-bill is a short-term, low-risk investment issued by a federal or provincial government. It is sold in amounts ranging from $1,000 to $1 million, and must be held for a fixed term which can range from one month to a year.

    * Above product list from the basics of investing Basics of Investing

    * More information about product umbrellas available under savings and pension plans Savings and Pension Plans