The Best High-Interest RRSPs in Canada

When it comes to choosing the right RRSP, it is important to do your homework. This is because all RRSPs have different rates. This can make a difference in how much you save and earn for retirement. Ideally, you want to get the highest rate, so let's take a look at some of the best high-interest RRSPs. 

Interest Rates on RRSPs

Interest rates for RRSPs fluctuate often and are heavily influenced by the Bank of Canada’s prime rate. Banks also decide on their own interest rates for RRSPs with the prime rate in mind. For this reason, where you choose to hold your RRSP makes a big difference. Here are some of the current rates available.

What's a Good Rate of Return on RRSPs

The above interest rates are considered good. However, it’s important to remember that not all RRSP rates are good, and they fluctuate quite often. When you’re looking for the right RRSP for you, you want to pay attention to the rate of return and what’s considered to be good. 

In Canada, a good rate of return on an RRSP is 2%-7%. If you can find an RRSP in this range, that’s a good place to start. Keep in mind that you can also transfer RRSPs. This means that you can transfer for a better rate without having to ever take the funds out and pay a withholding tax. 

Average Rate of Return on RRSPs

In Canada, the average rate of return on RRSPs is based on how long they’re held for. That said, they do range anywhere from 2% to 5%. This is a pretty good rate of return and falls in what is considered to be a good rate of return. 

RRSP Mutual Funds

When it comes to RRSPs, one of the most common ways to invest is through mutual funds. Mutual funds pool the money of individual investors to buy securities. Unlike other types of qualified investments for retirement funds, mutual funds are open-ended.  This makes them more desirable than other types of investments, including:

• Cash
• Savings accounts
• Guaranteed Investment Certificates
• Exchange Traded Funds
• Government Savings Bonds
• Corporate Savings Bonds
• Stock Exchange Securities

Best RRSP Investment Strategy

When it comes to RRSPs, there are plenty of different investment strategies to choose from. That said, which strategy you choose is based on your age, financial situation and other factors. Let’s look at one of the most recommended ways to start investing. 

Once you reach your 20s and 30s, experts recommend that you put away what you can. Even small amounts put into an RRSP can add up quite quickly. Plus, at this age, you have time before you’re ready to retire. Putting whatever you can into savings is a great idea. Plus, since RRSPs reduce taxable income, you can put your savings back into your RRSPs. 

Once you’re a bit older, a great idea is to take another look at your investments. See which investments could be earning more and which movements could earn you more money. Once you start getting closer to retirement, it’s a good idea to start adding more to your investments and bulking them up. You should also be looking at your long-term goals as well as your annual limits.

Best RRSP Mutual Funds

When it comes to RRSP mutual funds, there are plenty to choose from. It can almost seem overwhelming by how many choices you have. However, we have gone over some of the best RRSP mutual funds and what sets them apart, including monthly account fees, MERs and other things. Let’s take a look. 

CI Canadian Dividend Fund Series F

This fund has been around since June 13, 2006. Its main goal is to provide a mostly predictable stream of income and modest long-term growth. This fund invests primarily in Canadian stocks that are part of actively managed portfolios. 

The equity style of this fund is a large-cap blend. It has an annual portfolio turnover of 41.81% and holds total assets of $290.2M. The distribution yield is 1.83%, the MER is 1.33, and the management fees are 1%. 

In order to invest in this fund, the minimum initial investment is $500, and the minimum subsequent investment is $50. However, you are welcome to invest more as long as it’s within your annual contribution limit. 

Mackenzie Bluewater Canadian Balance Fund Series F

The purpose of this fund is to deliver long-term growth by investing in high-quality companies. Unlike other mutual funds, it focuses on a Core Plus investment approach and invests in high-quality investments that aren’t considered to be well known. 

In terms of asset class, this fund is considered to be Canadian Balanced. The total assets of this fund are $5,533,314,150. In terms of account fees, the MER is 0.95%, and the management fee is 0.7%. The distribution frequency is quarterly. 

AGF Global Select Series F

With this fund, there are many reasons to invest. It offers concentrated exposure to global equities and identifies companies that are more advanced than the rest. It looks for those who have great product development as well as leadership. It’s also good for those looking for a core portfolio that has a hand in the growth potential and earnings from global equities. 

This fund was launched on January 14, 2000 and has overall assets of $4,634.1M. The MER (Management Expense Ratio) for this fund is only 1.01%. This fund is also made up of different funds, but here are the top 10:

• NVIDIA Corp
• Amazon.com Inc.
• Intuitive Surgical Inc.
• Boston Scientific Corp. 
• Eli Lily and Co.
• ON Holding AG
• Spotify Technology SA
• MercadoLibre Inc.
• Compass Group PLC
• AstraZeneca PLC

Blue Bay Emerging Markets Corporate Bond Fund

This fund is relatively new and only started on October 31, 2021. They have total net assets of $142.24M and quarterly income distribution. The MER is 0.90%, and the management fee is 0.75%. The capital gains are distributed annually. The minimum investment is $500, and the minimum subsequent investment is $25. 

The fund itself is a good idea for investors who’re planning to keep the investment long-term. It’s also good for those who are seeking long-term growth potential. The risk for this investment is considered to be low to medium. 

Mawer Global Equity Fund

This particular series started on October 22, 2009. It has a fund net asset value of $13,407.80 and a total net asset value of $1,401.7M. The MER is 1.29%, and the trading expense ratio is 0.01%.

This fund has a bit of a higher risk than the other funds that we’ve mentioned. It’s considered to be medium risk. That said, this makes it a great option for investors looking to achieve above-average growth while dealing with some volatility. A few of the top holdings in this fund are:

• Microsoft Corp
• Nestle SA
• FedEx Corp
• Amazon.com Inc
• Insperity INC
• CGI Inc
• United Health Group Inc
• Alphabet Inc
• Booking Holdings Inc
• Publicis Group SA

Best RRSP Investments

Instead of choosing a mutual fund individually to invest in for your RRSP, you can choose to invest with a bank. Each bank offers different types of RRSP accounts and different earning rates. Let’s take a look at some of the best options currently available. 

Tangerine RSP Savings Account

One of the most popular options available right now for saving money for retirement is the Tangerine RSP Savings Account. This account offers an interest rate of 0.45%, no monthly fees and no minimum balance requirements. With this account, your funds aren’t locked in either. You can freely choose to move them to different investments within your RSP at any time. You can even choose to split them with a spousal RRSP. 

Steinbach Credit Union RRSP Variable Savings

With Steinbach Credit Union, there are a few different options available for RRSPs. You can choose their variable savings, GICs or Mutual Funds. While GICs are better for short-term savings, mutual funds and variable savings are better for long-term. 

With Steinback, the rate you get for their variable savings RRSP is based on the term that you choose and the amount of funds you’re investing. Rates start at 3.55% and can go as high as 4.65%. Just like with other RRSPs, this is a tax-sheltered savings account and isn’t to be used until you retire. 

Achieva Financial RRSP Savings Account

In Canada, Achieva Financials RRSP savings account is considered one of the easiest ways to save for retirement with cash savings. It’s ideal because you don’t even have to lock in your funds. The best thing about their account is that it combines the features of the daily savings accounts with the RRSP benefits, which include the high-interest savings rates. 

The features of this account include:

• No monthly fees
• Tax-deferred high-interest earnings
• Ability to transfer to RRSP GIC (competitive RRSP GIC rates)
• 3.35% interest calculated daily
• Ability to claim tax deductions

WealthONE RRSP Savings Account

With WealthONE, you can get an RRSP Savings Account that’s also referred to as a high-interest savings account. It has a competitive interest rate of 3.50% and has no monthly fees or minimum balance requirements. 

MAXA Financial RRSP Savings

With MAXA, you can get an RRSP with a 1 to 5-year investment. Just like the other RRSP options, it’s a simple and efficient way to put money away for retirement. There’s no minimum deposit required, no monthly fees, and the interest is calculated daily and added on a monthly basis. The interest rate is 3.45%. 

Outlook Financial RRSP High-Interest Savings Account

With Outlook Financial, you can get a High-Interest Savings Account RRSP at a rate of just 3.25%. You can choose to go with a Spousal RRSP or an individual plan, but either way, you can contribute up to your contribution limit every year. Once you reach a minimum of $1000 in your HISA RRSP, you can then transfer it into an RRSP GIC. 

Hubert Financial Happy Savings RSP

The current rate for the Hubert Financial Happy Savings account is 3.10%. This is a high-interest savings account that can be registered as an RRSP. All of the interest is calculated daily and paid monthly. There are no fees and no deposit minimums. You can also transfer out the RRSP at any time with no charge. Like many of these other financial institutions, the funds deposited with Hubert are 100% guaranteed by the Deposit Guarantee Corporation of Manitoba. 

Best RRSP Savings Accounts

Above, we have listed some of the RRSPs with the best rates. While a lot of them are considered to be RRSP daily interest savings accounts, not all of them are. Here are a few more accounts that are a great choice and are considered to be RRSP Savings Accounts.

CIBC

The CIBC RRSP Daily Savings Account is a great idea for those just starting an RRSP or looking for a short-term RRSP account. You earn 0.05% interest on your money, and both the principal and interest are protected. You also have access to your money. 

The great thing about this account is that you can invest as little or as much as you want as long as you meet the $25 investment minimum. Plus, you can start saving your RRSP without having to lock into something long-term. Since your interest is calculated daily, you can also set up a Regular Investment Plan to maximize your compound interest income. 

Unlike other RRSP accounts, you have access to your money at all times. That said, you will have to pay withholding tax on any RRSP withdrawals. There are also no fees with this account unless you transfer to another bank. In that case, the fee is $100. 

Simplii Financial

Unfortunately, the Simplii Financial RRSP Daily Savings Account is no longer available; however, they still offer the RRSP Savings Account. This account has a rate of 0.40%, and the interest is calculated based on the daily closing balance and distributions are paid monthly. 

With this account, no deposit minimums are required to open it. All of your deposits are tax deductible, and all of your withdrawals are considered taxable income. It’s also risk-free, and your principal and interest are guaranteed. 

EQ Bank

With the EQ Bank RSP Savings Account, you can earn high interest on every dollar that’s tax-deferred. You can earn 3.00% interest with no fees, and it can all be done online. You can even set up automatic withdrawals to make your savings easier. At any point, you can also lock your savings into an RSP GIC. 

Motusbank

The Motusbank RRSP Savings Account works similarly to the rest of the RRSP Savings Accounts we’ve discussed. You earn interest on the tax-deferred funds and don’t pay taxes on them until they’re withdrawn from the account. However, the rates for this account are slightly different than those for the others. 

With this account. You earn 0.25% on amounts from $0 -$2,500 and 2.60% on amounts $2,500.01 and up. There are also no minimum deposit requirements. 

Alternabank

The Alternabank RRSP e-savings account is a great way to save for retirement while earning 2.00% interest on your funds. There’s also no minimum deposit amount required. However, just like any RRSP, you have to stay within your annual RRSP contribution limit, which is 18% of your net taxable income (not pre-tax income) from the previous tax year or the current fixed contribution limit. 

Bank With The Best RRSP Rates in Canada

In Canada, there are many banks that have great RRSP rates. That said, which one works best for you will depend on your financial situation and your financial goals. If we’re looking at the best rates, though, then Tangerine is considered to be one of the best. This is because they offer a promotional rate of 6.00% as well as a high standard rate. 

Why Choose An RRSP 

There are many reasons to choose RRSP investing for retirement planning instead of a regular savings account. One of the largest reasons is the tax benefits. These benefits are meant to save you money even though you’re only deferring the tax. The idea behind this is to save you money since you are likely in a smaller tax bracket once you reach retirement age. Since your RRSP contributions reduce your net taxable income, you can also reduce your annual income tax. 

When it comes to RRSPs, there are contribution limits that you have to stick to in order to avoid penalties. That said, any unused RRSP contribution room can be moved forward to the next year. You can’t just withdraw funds at any time like you can with a tax-free savings account. There also aren’t tax-free withdrawals, but this can help ensure you save the funds for retirement. 

Types of RRSPs

When it comes to RRSPs savings, there are a few different types. The most common are individual RRSPs, group RRSPs, and Spousal RRSPs. However, whents its’s time to redeem your RRSP investments, you then turn them into Registered Retirement Income Funds.  

Individual RRSPs

Individual RRSPs are RRSP accounts that you hold yourself. You can deposit funds up to your contribution limit into these RRSPs at any time. You can also choose to hold more than one. Because there’s no one else contributing to the RRSP, you can also choose what type you want and where you want to open it. 

These RRSPs also give you access to different programs, such as the Lifelong Learning Plan and the Home Buyers Program. It allows you to purchase a home or go to school using your RRSP funds without having to pay the tax on these withdrawals. 

Group RRSPs

Group RRSPS are RRSPs that are opened by your employer. With these accounts, you can still put as much as you’d like up until your contribution limit, but your employer will only match so much of your contributions. Also, you can usually only withdraw so much because this is your employer's way of creating a pension program. You often need special permission to withdraw money thats more than the allotted limit. All contributions made to this account are from payroll deductions.

Spousal RRSPs

Spousal RRSPs are RRSPs designed for couples who are married or common-law and allow one spouse to contribute to the others retirement savings. While the spousal RRSP will be in one partners name, the spouse that’s contributing will get the tax savings of the RRSP. 

There are many reasons that people choose to put into a spousal RRSP, but the main reason is tax advantages. This is because your annual income will be different from how much taxes you pay based on your tax bracket. Having a spousal RRSP allows you to split your earned income and help reduce the taxes of the higher-earning spouse to a lower tax bracket.

Final Thoughts

In Canada, there are many different types of RRSPs, including high-interest, mutual funds, EFT, GIC and more. Which one you choose is based on the type of risk you’re willing to take and how that will affect your overall financials. While mutual fund RRSPs can be quite popular, they also come with some risk. High-interest RRSPs, on the other hand, don’t.

With high-interest savings accounts RRSPs, both your principal and interest earnings are protected. This is because they’re risk-free investments. However, there isn’t as much earning potential with risk-free investments as there is with low, medium or high-risk investments. Essentially, the more risk, the more reward, but it’s not guaranteed. 

If you choose to go with a high-interest RRSP, you want to be sure that you get the best rate available. If you start researching the different options, you’ll notice that each bank has its own rate and restrictions. If you start paying attention to those, you’ll be able to choose the right RRSP that meets your needs. You can also use these types of RRSPs in the short term while you decide on a more permanent investment.