question about rrsp?

[kingfencer]

so if i lock in to a rrsp gic, then i can enter an amount like 5000 once, for 5 years, and i can't touch that for 5 years?

what about a regular rrsp , it has lower rates but i can keep on adding money to it?

[Anonymouse]

There are two distinct concepts here; RRSPs and GICs.

A Guaranteed Investment Certificate is an investment vehicle where you lend someone money for a fixed period of time and you get a certain amount of interest as compensation. There are usually huge penalties associated with backing out of such a contract before the maturity date, if it's possible at all.

A Registered Retirement Savings Plan is a basket that you can put investment vehicles in so that it's sheltered from tax on the gains you make. You can put stocks, bonds, mutual funds, GICs, etc. into an RRSP.

[Islington]

You can contribute money to your RRSP account, whenever you want, up to your annual contribution limit. However, if you attempt to take money out of the RRSP account, you will incur some immediate tax penalties.

As Anonymouse noted, you can invest the money within your RRSP account in stocks, bonds, mutual funds, GICs, etc.: you're only limited by whichever investment products the financial institution that holds your RRSP account offers to its customers.

Once the money is in your RRSP account, you can decide how you want to invest it. You might choose to lock it into a 5-year "uncashable" GIC; or you may go for a 6-month GIC (or some other type of investment). The only difference (aside from the interest rate you'll earn on the two different GICs) is that you'll have to make another financial decision -- in either five years or six months -- when the GIC term comes to an end, about how you'll want to reinvest the money within your RRSP account.

[kingfencer]

i see, thanks alot for the clarity, i don't have 1 penny in any savings account...