RRSP's

RRSP's stands for Registered Retirement Saving Plan
This is plan to save money for retirement. It has many advantages.

Main benefit of RRSP is that a contribution to a certain limit is tax free and money compounded in it is tax free. It is basically holding an investment people often confuse it with investment but its just a holding of an investment.

Eligibilities for RRSP:

• if you file tax with the Canadian government.
• under 69 years of age
• if you have a constant income.

So, there is a capping to certain limit of holding investment as its tax free so government has law that restrict RRSP buyers to hold a certain amount of money. Here is an example that may help you to understand it:

  Josh earns $50,000 and if he wants to buy a RRSP, 18% of $50,000 is $9000 whereas, his brother Mark who is well settled businessman and earns $200,000 if he buys RRSP he can contribute 18% of $200,000 that is $36,000 but government capped it at $22,000 so he just can contribute and $22,000 out of $200,000 and has to pay tax on rest $164,000.

Important things to remember:

• Do not take money out.
• Start investing early because compounding is a big factor.
• RRSp's grow tax free.

source:http://www.investopedia.com/university/rrsp/

Here's a video that will walk you through details of RRSP