Oversimplification: An RRSP is basically a cardboard box

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You know what people in the finance world love to joke about?

How no one understands what an RRSP is.

Oh, how they laugh.

They laugh like it’s ‘so simple’.

And then when they try to explain it, they bog it down with so much bullshit, that even I get confused – and I’m pretty sure I know how RRSPs work! (If you want to know how they compare to TFSAs check out our TFSA vs RRSP showdown.)

So I decided to make an RRSP infographic (hold the applause please) that ignores a lot of the little rules that you really don’t need to know about right now and boils RRSPs down to a few fundamental things.

If you don’t know what an RRSP is, here’s a place to start….

What is an RRSP? It’s basically just a cardboard box…


If you feel like you’ve got a ton more questions… good.

There’s always more to know, but sometimes it’s good to start with an oversimplication.

Once you know what an RRSP or a TFSA (really just a slightly different type of cardboard box) is, then the rest of this investing stuff slides into place.  Opening up a Questrade account and buying and selling your own investments *within the “cardboard box” of an RRSP* begins to seem like a much more manageable process right?  Or perhaps a “set it and forget it” solution such as a robo advisor is more to your taste?  At least if you know that you aren’t “buying RRSPs” then you can get a much better understanding of where your money is actually invested – making it much more likely that you will stay the course

As of January 2018 we're seeing more and more of our readers opt for these low maitenance, super simple ways to start up and contribute to an RRSP.  In fact, robo advisors are getting so popular in Canada, that even the big, relatively slow moving banks are getting into the act and offering robo advisor-type of services.  Check out our BMO Smartfolio Review and RBC InvetEase Review for more information on how some of the largest and most profitable companies in Canada are responding to this online investing revolution.  The point being that it has never been quicker and easier to set up your super awesome financial "cardboard box"!

Even as something as benign as understanding that a high interest savings account (like the one we prefer from Tangerine) is not the same as a Tax-Free Savings Account (TFSA) puts you ahead of most Canadians, and allows you to get a grasp on what the heck these “registered cardboard tax boxes” are, and how investments work while inside them.

And please share this one around… so we can end those “they don’t even know what an RRSP jokes” once and for all.

They’re really not that funny.

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  1. Owen @ PlanEasy on June 26, 2017 at 7:55 am

    The box analogy is great. Helps clear up a common misconception that your “buying” an RRSP when in fact your buying stuff TO GO INTO the RRSP.

  2. Joan wood on July 18, 2017 at 10:14 am

    Once again, your article is both interesting and informative. I love the sense of humour approach and the use of graphics to enhance the mains points.
    As a senior citizen who started investing in RRSP’s when initially offered (I can’t even recall how many years ago), I have benefited tremendously every year at tax time.
    Perhaps you might have included the advantage of having an RRSP once annual income is minimal at retirement. At age 71 when this income must be claimed, it is a distinct advantage to have a reduced income. Just a thought…..
    Keep the great articles coming!

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