A Non-Registered Account is a type of investment account that is subject to tax when income is earned on the investments held in the account. These account types are sometimes referred to as “taxable” or “open” accounts.
A non-registered account can help balance out your financial plan as it has benefits that include flexibility and no contribution limits. With non-registered accounts, you can invest in mutual funds, exchange-traded funds, GICs and other products.
Since there are no contribution limits, you can save as much as you want without any penalties or limits on withdrawals.
There are no age limits on a non-registered account. Anyone over the age of 18 can open an account, and unlike an RRSP, which matures into a Registered Retirement Income Fund past the age of 71, you can keep saving well into your golden years.
If you have reached your contribution limits on your registered accounts (RRSP or TFSA) and still have money to invest, this is the ideal alternative to hiding the money under the mattress.
At A Glance
Registered vs. Non-Registered Investments
|Taxes||Grow your investments tax-free until you withdrawal (except for TFSA)||Investment income is taxed but withdrawals are not|
|Contribution Limits||Annual limits on the amount you can contribute, after which you may have penalties or tax consequences||No Limit! Free to contribute as much as you’d like|
|Age Limits||Most registered plans have a minimum or maximum age limit for opening of account and contribution||No age limit which allows for greater flexibility|
Choosing Between Registered vs. Non-Registered
Factors to Consider:
- Your marginal tax rate now and in retirement
- Nature of investment returns
(ie. dividends, interest income, capital gains)
- Amount you plan to invest
- Purpose of your investment and time horizon
Invest Today For Your Tomorrow
Deciding to get an early start on the wealth-building journey is likely one of the most rewarding financial decisions you could make. Do not make the mistake of waiting years for that seven-figure paying job, or waiting on inheritances or settlements before saving or investing your first dollar. Start today.
In basic terms, this is how you build wealth: