In which order should you invest in RRSP TFSA or FHSA?

The best order depends on your goals and income level — especially if you are likely thinking about buying property at some point.

Here’s the general priority order for most people:

1️⃣ FHSA (First Home Savings Account) — If you plan to buy your first home

Best first choice if you’re eligible.

Why prioritize it?

• Contributions are tax-deductible (like an RRSP)
• Withdrawals for a first home are tax-free (like a TFSA)
• Annual limit: $8,000
• Lifetime limit: $40,000
• Must be used within 15 years

👉 It’s basically the best of both RRSP + TFSA combined.

Use first if:

• You plan to buy within ~15 years
• You haven’t owned a home before

2️⃣ TFSA (Tax-Free Savings Account) — Most flexible

After maxing FHSA (if applicable), TFSA is usually next.

Why?

• Growth is tax-free
• Withdrawals are tax-free
• No impact on taxable income
• Great for emergency funds, investing, or flexibility

Use before RRSP if:

• You’re in a lower tax bracket
• You want flexibility
• You may need the money before retirement

3️⃣ RRSP (Registered Retirement Savings Plan) — Best for higher income

RRSP shines when you’re in a higher tax bracket now and expect lower income in retirement.

Why?

• Contributions reduce your taxable income today
• Tax-deferred growth
• Good for long-term retirement

Use before TFSA if:

• You’re earning high income (e.g., $90K+ depending on province)
• You want the tax refund now
• You’re focused strictly on retirement

Simple Decision Guide

If buying a first home:

FHSA → TFSA → RRSP

If NOT buying a home:

• Lower income → TFSA → RRSP
• Higher income → RRSP → TFSA

Example

If you earn $75,000 and want to buy a home in 5 years:

1. Max FHSA
2. Invest extra in TFSA
3. Then RRSP

If you earn $130,000 and already own a home:

1. RRSP
2. TFSA

To make the decision you need to know the following:

• Your income
• Whether you plan to buy a home
• Province
• Short vs long-term goals