TFSA vs. RRSP vs. FHSA: Pick the right account for the life you’re building

Account questions are life questions

Put aside the side-by-side comparisons and fancy flowcharts for a moment. They have their purpose, but the answers you’re looking for come from a simpler place: knowing yourself.

Before interest rates and contribution limits, the questions that matter are the ones that shape the life you’re living right now—and the one you’re envisioning just over the horizon.

This guide is built around those questions. First, we’ll walk through the essential check-in with your own financial life. Then, we’ll connect your answers to the tools that can help you build what’s next.

Question 1: Where are you now?

Are you in your early twenties, with the train tracks and safety of being a student freshly behind you, starting a career and wondering where it all will go next?

Are you in your thirties, perhaps with a partner, perhaps still hoping for one, and the conversations you keep having with loved ones are starting to shift towards houses and family?

Or are you further along, established in your career, with retirement becoming less of an abstract concept and more of a real destination?

You don’t have to tell us. But be honest with yourself about your life stage. The best choice for a 25-year-old building a safety net is different from a 45-year-old maximizing their retirement savings.

Question 2: Do you have an emergency fund?

An uncomfortable truth is that: life is expensive, and the cost of living just seems to always go up.

Which is tricky because life is also unpredictable—job markets are less than stable, unexpected and uncalled for expenses are always possible.

Having an emergency fund—typically 3 to 6 months' worth of essential living expenses kept in a safe, easily accessible place—is the foundation for all other wealth building.

It’s a life jacket that keeps a bad day from sinking into a crisis, and the reassurance that you can invest long term because your short term is taken care of. Knowing that a sudden car repair or job loss won’t force you to sell your investments at the worst possible time is invaluable.

Before you think too far into the future, make sure you've secured the present.

Question 3: Do you have high-interest debt?

This one is pure math. If you have credit card debt with a 21% interest rate, your money is disappearing at a rate of 21% per year. To outpace that loss, your investments would need to earn more than 21%—a return that is highly unlikely.

For context, the historical average annual return for the Canadian stock market over the long term is around 8%. If you’re paying 21% on debt and earning 8% in the market, you’re still losing 13% every year.

Paying off high-interest debt is often the single most powerful financial move you can make.

Question 4: What are your work perks?

Your paycheque is only one part of your compensation. Does your employer offer an RRSP matching program? A pension? Stock options? This is not a bonus—it's part of your salary that you are leaving on the table if you don't use it.

If your employer matches your RRSP contributions up to, say, 5% of your salary, that is an immediate, guaranteed 100% return on your money. No investment can match that.

Always, always take the free money. Understanding these perks is essential, as they can supercharge the accounts you choose to open.

You know your life. How do you pick an account that matches it?

The best place to start is to not think about the account at all. Instead, develop a clear sense of your “why”—the reason you’re investing in the first place.

Once you know what that is, all you have to do is select the account that syncs up with your purpose.

Do you want to own your first home?

Maybe you’re already scrolling through listings.

Or, maybe, as you walk around the city, you and your partner have made a game out of pointing out your favourite parts of the houses you pass—the oak door of the one on the corner, the floor to ceiling windows of the one at the crosswalk.

This is FHSA territory. It’s an account designed with a single, powerful purpose: to turn the dream of homeownership into keys and moving day and furniture shopping.

Quick facts: FHSA

• What’s it for: To save for a down payment on your first qualifying home.
• The big advantage: It’s a tax hybrid. Your contributions are tax-deductible (like an RRSP), and your withdrawals to buy a home are tax-free (like a TFSA).
• Contribution rules: You can contribute up to $8,000 per year, with a lifetime maximum of $40,000.

What the data says about FHSAs

The First Home Savings Account is a relatively new tool, but its impact is already clear.

Since Questrade launched the first FHSA in Canada, hundreds of thousands of Canadians have opened an FHSA, with Statistics Canada reporting that in its first year, nearly half a million people made contributions, the majority of whom were between 25 and 34 years old.

It’s quickly become the go-to vehicle for a generation planning their first major purchase.

Why other investors choose Questrade for their FHSA

The FHSA isn’t just a savings account—it’s a trading account where you can buy and sell stocks and ETFs. That’s where our no account fees and zero-commission trading becomes so valuable. Instead of your bank taking a cut each time you trade, all your savings go towards that down payment.

Common FHSA questions, answered

• How is the FHSA different from the RRSP Home Buyers' Plan (HBP)?
  Think of the FHSA as the modern, more powerful version of the HBP. With the HBP, you’re borrowing from your RRSP and must repay it within 15 years. With the FHSA, a qualifying withdrawal is tax-free and never needs to be paid back.
• What if I don't end up buying a home with my FHSA?
  Your money isn't lost. The account can stay open for up to 15 years. If your plans change, you can transfer every dollar you’ve saved and earned directly into your RRSP or RRIF, tax-free, to give your retirement savings a major boost.
• How does contribution room work for an FHSA?
  This is a key difference compared to a TFSA or RRSP: you only start accumulating the $8,000 annual contribution room after you open your first FHSA. Any unused room (up to a maximum of $8,000) can be carried forward to the next year.

Do you need to prioritize flexibility and control?

The future you want most may not always take just one shape.

Sometimes it’ll be that trip you always said you would go on. Sometimes, it’s the freedom to say “yes” to things without hesitation—accepting a job in another city, taking your parents out to a fancy dinner, treating yourself to that jacket. And, sometimes, it’s just the peace of knowing that if one of those lights on your car’s dashboard becomes a big problem, you’ll be okay.

This is TFSA territory. Life isn’t always first homes and retirement, but one thing that is always valuable: control. That’s what a TFSA gives you—the control to live life on your terms.

Quick facts: TFSA

• What’s it for: Everything. An emergency fund, a new car, a vacation, supplemental retirement savings—the limit to its uses is your imagination.
• The big advantage: Tax-free growth and tax-free withdrawals. You can take your money out at any time, for any reason, without paying a cent of tax on the gains.
• Contribution rules: The annual limit changes, but unused room carries forward indefinitely from the year you turn 18.

What the data says about TFSAs

The TFSA is overwhelmingly the most popular registered account in Canada.

According to the latest government data, over 16 million Canadians have a TFSA. It’s used by people across every income level and age group because its flexibility is unmatched. It is the foundational account for modern Canadian investors.

Why other investors choose Questrade for their TFSA

A TFSA is the ultimate multi-tool, and at Questrade, you can make it even more powerful. Because it's a trading account, you can actively grow your savings by buying and selling stocks and ETFs. With our no account fees and zero-commission trading, you’re not losing a cut of your money to your bank with every trade. That means your emergency fund, your vacation fund, or your nest egg gets built faster.

Common TFSA questions, answered

• What can I hold in a TFSA?
  It’s much more than a savings account. A TFSA can hold a wide range of investments like stocks, ETFs, and options. At Questrade, you can use it as a powerful trading account to actively grow your savings for any goal.
• How does contribution room work for a TFSA?
  Your TFSA contribution room starts accumulating from the year you turn 18 (or the age of majority in your province) and carries forward every year, whether you have an account or not. When you withdraw money, that contribution room is added back to your limit at the start of the next calendar year.
• Is there an age limit?
  No. Unlike an RRSP or FHSA, your TFSA can stay open for your entire life, making it a flexible tool for every stage of your financial journey. However, you do have to be the age of majority to open your TFSA in the first place.

Do you want to set yourself up for life after work?

It’s easy to daydream about and hard to really imagine for yourself. Retirement. As costs keep rising and economic uncertainty becomes more familiar, retirement can start to feel less like a guarantee—especially a good retirement.

But that’s the thing about big dreams: they’re essential, even when they’re hardest to believe in.

An RRSP is engineered to make it more believable. To take you from doubts to thinking: “Maybe this really is possible.” It won’t make your grocery or cell phone bill less jarring, but it is a practical tool for a complicated time—one that lets you make a promise to yourself that, one day, you’ll get there.

Quick facts: RRSP

• What’s it for: To save for retirement. But, with the Lifelong Learning Plan and the Home Buyer’s Plan, you can also use it to cover education and homebuying costs.
• The big advantage: Tax-deferred growth. You get a tax deduction on your contributions today, and your investments grow tax-sheltered until you withdraw them in retirement.
• Contribution rules: 18% of your previous year’s earned income, up to a maximum annual limit ($32,490 for 2025). To deduct contributions from your 2024 taxes, you must contribute by March 3, 2025.

What the data says about RRSPs

For decades, the RRSP has been the cornerstone of Canadian retirement planning.

While usage varies, data from Statistics Canada shows that over 6 million Canadians contribute to their RRSPs, with those aged 45-64 being the most active contributors. For many, it's the primary vehicle that will fund their post-work life.

It’s a proven, effective tool for long-term security.

Why other investors choose Questrade for their RRSP

When you’re investing for decades, fees matter more than ever.

The commissions charged by big banks on every trade can add up over 20 or 30 years, creating a significant drag on your retirement savings.

At Questrade, our zero-commission trading on stocks and ETFs means that money stays in your account, compounding year after year, getting you closer to life after work faster.

Common RRSP questions, answered

• When is an RRSP a better choice than a TFSA?
  Generally, an RRSP is more advantageous if you are in a higher tax bracket now than you expect to be in retirement. The upfront tax deduction provides significant savings today, and you’ll pay tax on the withdrawals later when your income (and tax rate) is likely lower.
• What happens to my RRSP when I turn 71?
  This is a firm deadline. You must close your RRSP by the end of the year you turn 71. Most people convert it into a Registered Retirement Income Fund (RRIF), which then provides them with a regular, taxable income stream throughout retirement.
• Can I contribute to my spouse’s RRSP?
  Yes. A Spousal RRSP allows a higher-income spouse to contribute to a lower-income spouse’s account. This is a common strategy to help split income more evenly in retirement, which can lead to significant tax savings for your household.

So, what’s the final verdict? A quick comparison

That side-by-side comparison we talked about at the start? Now is its time to shine. This is how the FHSA, TFSA, and RRSP stack up against each other.