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Have you ever wondered what the Canadian equivalent of a Roth IRA is?
How about a high-yield savings account? What kind of investing accounts exist for Canadians?
Today, we’re joined by our HFK Canadian creator, Mallory Rowan to give you the TLDR on Canadian options for investing, saving, and more. This short and sweet bonus episode is a guide to Canadian equivalents to popular American investing products. Don’t forget to check out Mallory’s first episode with us, where she shares the story about how burnout almost killed her.
When Mallory was 22, she built a global, multi-six figure e-commerce business on a student budget. They were scaling incredible fast but then it happened: she burned out. She started losing her hair, getting unexplainable rashes all over her, and she didn’t even notice she had pneumonia until a doctor heard her trying to catch a breath. Now she helps entrepreneurs build without burnout: more specifically, she helps them skip the burnout entirely, work less but actually start earning more, and do it on their OWN terms. She has been featured as a Shopify Master, a lululemon ambassador, and one of United Way’s “People to Know”.
Hello, financial feminists. It is bonus episode time. That’s my rap air horn for you, and I purposely went off the mic for that. I didn’t do it right up close, because I protect your ears. I want your ears to be okay.
We’re hoping to give you a bonus episode at least every other month, and sometimes every month; so if you listen to last month’s bonus, you’re already aware of the incredible Mallory Rowan, or if you’re following us on Instagram, either at Financial Feminist podcast or Her First $100K, you’ve seen her face. And if you haven’t listened to that episode, I would suggest maybe listen to that one before you listen to this one, but you can also get a ton of value just from today’s episode. This previous episode, the bonus episode before this with Mal, was from may where we introduced her and told her a little bit about her story. But today, Mal joins us for a special episode for our friends from the great white north AKA Canada.
I can’t tell you how often we get asked about Canadian finance. You might be shocked to learn that actually about 20% of our audience is international on the show; so again, if you’re an international, hello, I’m waving to you, blowing you kisses. And it’s actually closer to 50% on social media; over half of our Instagram is folks not based in the United States. So one of the many reasons we asked Mal to be one of our HFK creators is because she can speak to Canadian finance better than I can. I have a general knowledge of it, but like I said on Mal’s episode before, literally every country is slightly different; every country has their own different accounts and own different roles, and so… Hard enough just keeping track of the United States parameters. So I’m so excited to have Mal here today.
And if you are an American thinking, yeah, this isn’t for me. Okay, you got two options. Listen, anyway, learn something new; it’s important to understand how other financial markets work, and how other countries operate, and you’re going to have some new nuggets of wisdom in your back pocket. And number two, if you maybe don’t want to listen, send this episode to a Canadian friend who needs it, because sharing is caring, eh? That was for you Canadians.
Okay. In this episode, Mal is breaking down some of the Canadian versions of American accounts that we discuss all the time, as well as an overall primer for your options as a Canadian investor. Can’t wait for you to listen. Again, feel free to either tap out on this one if you’re not based in Canada; or listen, enjoy it, learn something new, send to your Canadian friends. All right. Without further ado, let’s get going. =.
Let’s talk about Canadian finances. Okay. So we at Her First $100K talk a lot about high yield savings accounts. I know you have a Canadian equivalent; can you talk about what that is? What the… Because it’s HISA, I think. Right? Can you talk about what that is, what that means and how it’s slightly different than the States’ high yield savings count?
Yeah. So you’re right. It’s the I that’s different, but it’s otherwise generally the same thing, so we call it a high interest savings account. Same idea. A lot of them kind of took a hit with COVID. Honestly, this is the thing, and we could talk a bit about some of those differences, but Canadian banking, I feel like, is generally way more regulated. So we just don’t have a million and some options, so a lot of banks now are coming out with their own high interest savings account, but overall EQ Bank, I would say, in Cana
da, unless your Quebec, unfortunately, it’s not available in Quebec. But EQ bank is a great spot for high interest savings accounts. If you go to malloryrowan.com/eqbank, it’ll get you set up. They’re currently at this time, 1.5% interest rate. Used to be higher-
Which is much better the the States right now; we’re at a half percent.
Yeah. We’re at a half of percent, as of this recording. This is May 4th, 2022; half a percent. Yeah. Which is still better than your everyday average bank account, which is getting you 0.01%, 0.03%.
About two weeks ago, they went up to 1.5; through most of COVID they’ve been 1.25. But still, I mean, you can’t really beat that. Also, I’m biased. I really like it, because you can like nickname your different accounts, and then you can put like a little tracker. So you could say like, if you were building your emergency fund, let’s say you can name an emergency fund, and then you can say my goal for this is 10,000 and it’ll show you a little tracker. So it’s super fun. So yeah, generally that is the same thing. Same idea, we’re making like 0.0 nothing in regular accounts, so everyone should be using that for their savings.
We know Canadians also invest in the stock market. What account options do you have for retirement/investing? And I can pop in and give like, “This is the US equivalent.” So can you break those down for us?
Yeah. These always make me laugh, to Canada and the US. Sometimes it kills me, because I feel like we’re literally just the upstairs neighbors. And then I remember one time I was in the States, and someone was like, “Do you guys have country music in Canada?” I was like, “Where do you think we live?”
I’m sorry. Shania Twain is Canadian. The queen of country.
Yes. Exactly. We started naming Canadian bands. We were like, “Are you joking?” Actually most of the hot music right now are Canadian artists, I’ll say. But yes, we do invest in Canada, as you said. So the main accounts people would talk about is the TFSA and the RRSP. So TFSA is tax free savings account, and then RRSP is registered retirement savings plan. So I think… I always forget your Roth IRA.
Well, TFSA is, you have the option of investing with that, right?
Or is it automatically an investing account immediately?
No, it’s option. You could have just a TFSA savings account, or you can invest through it.
Yeah. You could do that technically with an HSA, which is a health savings account. We don’t really have an equivalent, like any retirement account that you do is typically an investing account; so that’s what I think one of the biggest differences is.
Yeah. I feel like our RRSP gets broken into different categories for you guys. Right? Like your Roth IRA and-
Yeah. So the 401k is offered through the employer, right? It’s the employer-sponsored plan. And then we have the IRA, which is the individual account that you’d have to open on your own. But both of those are retirement accounts that are tax advantaged, so they’re giving you tax breaks in terms of saving. So yeah. Can you split, what was it? TFSA and then RRRR
RR. I’m like, I never have to say it this many times in a row. And then there’s RESP, which is for your kids; it’s an education savings plan, which is a lot easier to say.
Yeah. The, the American equivalent is the 529.
Yeah. So that one’s a lot easier to say, so I kind of wish we were talking about that. But the RRSP and the TFSA; so they both have contribution limits, and it both increases yearly. They’re just managed a little bit differently. So TFSA, usually, you’re going to get 6K of space every year; and if you haven’t previously filled up your contribution, you still have that space. So it’s not like if I don’t add 6K, I just lose it next year. So as an example, I’m 29. Let’s say if I have… Well, on Friday. Let’s say I have invested nothing so far. I’m sitting at just over 71,000 in contribution room. So next year, it’ll add another 6K; that’ll be 777. So it doesn’t matter if one year I’m contributing 20, the next 3, whatever. So, that’s kind of how the TFSA works.
And then the RRSP is more based on your income. So it’s generally 18% of your income from the last year. Your claimed income is what you can contribute the next year. And there’s a max with that, but honestly the max is like 30,000 or something; so it’s basically, you’d be making like 160K salary if you’re doing that, which I feel like is not the main concern here for most people.
So that one’s a little bit more personal. What’s cool with these, is we have… I don’t know. You can let me know the equivalent. We have like My CRA login. So our CRA, Canada revenue agency, is like the IRS. So we actually have like a login, and you can either log in through the major bank logins, or you can get like… whatever, a different one. But it can actually tell you your personal limit, so if you’ve never invested in either of those, or maybe you invested a little early on and you’re really not sure where you’re sitting, as long as you haven’t taken stuff out this year, it’s always going to be based off last year’s taxes. So it’s not like a smart machine. But it will let you know where you’re sitting. So that’s a really great tool if you’re like, “I have not put money into either of these.” That’s a great place to just log in… Most people probably should have a login from their tax stuff anyways, but it will let you know those numbers.
And then there’s some pretty cool stuff. Like some of the investing platforms like wealth, simple in Canada, they will actually track it for you. So you can invest in either TFSA or RRSP through them; and you just let them know like any investing you’ve done prior to then you can kind of fill in, and then it will track forward for you. So that’s kind of cool if you’re doing it through one of those platforms, it’s letting you know, hey, you only have, let’s say 7,000 left in this account. Maybe you have 20,000 left of contributions based in that one.
I don’t think… there’s probably something on the IRS, but I don’t know how helpful it would actually be. So we break all of this, all of the American accounts, the retirement accounts, down in episode 16 about retirement accounts. So you can go back and listen to that. For us in the States, the only like percentage thing is for the SEP IRA for self-employed people or side-hustlers. That’s really one of the only ones that does the income limit thing. The rest of them are just like a hard number. For 401k, it’s like 20,500. That’s it. So yeah, I think that’s the difference there. So, really, you have like two basic accounts to save/invest for retirement in Canada.
Yeah. And there’s the constant debate of people saying which one should I put my money in, and it’s like, it’s such a hard call. People kind of say like, “You want to take your RRSP out when you’re making less than you currently are.” Right. So when you’re in theory, like if you retire-
Is it similar with like Roth and traditional where it’s, how you’re taxed?
Is that the idea?
Okay. Can you explain the taxes on either one?
Yes. So the RRSP gets taxed when it comes out, I believe. I’ve always got to triple check these. TFSA is taxed beforehand. So you can take out your TFSA money whenever.
Okay. So, that’s like a Roth.
Yeah. That’s why you want to be making less when you’re taking from your RRSP. The RRSP would also be generally how most employers work with you if they are doing like employee matching. We do have that, obviously I haven’t been in corporate for a long time, but I would say most employers have some sort of matching program, whether it has like a limit. Some, I know like my last employer, you had to like stay with the company for two years. Well, I didn’t, obviously, but you had to stay there for two years. I didn’t even… That was the funny thing. I guess I knew I was going to go full time at some point, because I didn’t bother investing in the match thing, because I was like, “I won’t be here for two years.” But some of them have that, , you have to be here for two years; and then anything they match, you get to keep, yeah. Those are the main two. And like I said, there’s no real right or wrong answer of which one you’re filling up first. It is a constant debate for people.
We always say just just pick one; the analysis paralysis is real. I just want you to get started. As long as you’re investing for retirement in some way, just pick one. Go with it. Make it happen. Yeah.
Yeah. And there’s talk right now of another one, but it… So with our RRSP, there’s a few different first time home buyer incentives in Canada, and one of them is that you can borrow from yourself in your RRSP. So you’re allowed to take out, what’d I say, like 30K or something, but it’s per person. You’re allowed to take out of it to buy your first home and then pay it back; they’re talking about doing another like separate account that you could use for a home saving and take out and not have to pay back. But that’s like very in the politics world right now, so I don’t know if that will be 100%, but that’s something they’re looking at.
So in addition to accounts, retirement accounts, HY/HISA’s what other like major differences are there, or things that, if you’re a Canadian listener, you should know about how to navigate?
I think the overarching differences, Canada’s generally more federal in most things that we do. A lot of the times, our federal, I would say, guides the provinces more than the States. And part of that is like a population thing. Texas and California each have more people than Canada does, so before… It wasn’t until I was in the States more, I was like, “Wow, this state is basically our country when it comes to people.”
It’s a full country. Yeah. It’s very [inaudible 00:13:23].
So where you’re seeing like all these laws in the States being developed that are way more like state dependent; in general, Canada, you can take Canadian advice more so across the board. That’s what I would say when it comes to the money conversations. There’s going to be small differences. Like your income tax or sales tax might be different in each province, but nothing is ever like, so crazy drastic that advice you’re maybe getting from a Canadian creator wouldn’t apply. So that’s like kind of a blanket statement of, in general, if you’re getting Canadian money advice, you’re okay. Quebec loves to be kind of its own thing; so if you’re in Quebec, that’s the only one where I’d say stuff like EQ bank, they can’t operate there. So you will run into some stuff. I know some Quebec people where they’re constantly going through loopholes that other people don’t have to go through; but in general, the advice you hear can apply to everyone. There’s also a lot more, I would say, in Canada, just consumer protection overall, so-
… with, like I mentioned, the banks being… Yeah. I like to say that Canada likes to take care of us a little bit better than America.
accurate. Yeah. Americans, we’re individualistic, man. Yeah.
It’s very like, you’ve got your independence.
Canada’s like, “Well, we’re, we’re just going to make sure you’re eating okay.”
Home of the free, land of a brave.
That’s America for you. Yep.
So that’s one thing. Obviously, any of these issues can still occur, but I think we see less intense things like credit card debt or debt pile up, because our banking is more regulated. There’s less banks, which also means there’s less options like coming at you all the time. It’s harder to get approved for like multiple credit cards from multiple banks; it’s just not as much of a thing here, so that is one thing that’s nice. I feel like just that cultural difference, too. We’re just less excessive.
When we go to the States and we get an iced coffee or something at McDonald’s and we get a medium we’re like, what did you just hand me? Because it’s like an extra large, and we don’t even have that size that is your medium.
Yeah, that sounds about right. Yeah. It’s the Parks & Rec where it’s like, “How is this a child’s size?” And she’s like, “Well, it’s roughly the size of a two year old child if they were liquified.” Yeah. I feel it.
Yeah. I would say just like a few other small things to keep in mind. If you’re thinking about quitting your job and going full time, we definitely do have more of those healthcare advantages. So we have that basic healthcare that covers, and also I’d say our insurance plans are better. I know we’ve talked about you having insurance and then still having to pay a lot for certain things; it’s a lot safer in Canada to quit your job at a young age and not have health insurance, because you can still go to the hospital or even your family doctor for checkups and stuff. And the pricing, I feel like, isn’t as wild because like I can go to the dentist is like $200 bucks or something, I feel like that’s pretty fair; they’re in my mouth for an hour or whatever.
Not my worst Wednesday I’ve ever spent. Yeah, sure.
Right. But yeah, I would say you’re… Stanley. I’m not going to make any further jokes on that, because it’s about to get-
Oh. It’s right there. It’s ripe for the taking.
It will happen after we stop recording. But I would say generally, yes, you are safer. We actually just this year got ourselves a benefits package, and that’s only because we hired a full-time employee and we were like, “We should offer her benefits and it wouldn’t be a bad idea for us.” And I know in Ontario, I’m not sure if this has changed recently, but people under 24, your prescriptions were covered, even if you weren’t on insurance.
Mm, must be nice.
Yeah. So stuff like that. I literally stocked up before my 25th birthday. But things like that, it’s a bit safer to make those calls. Things like housing, I would say for sure, for sure, look into first time home buyers plan. Also we can link Josh, but anything you can learn if you’re looking to buy for first time, there are actually, I mentioned the one incentive of the RRSP, there’s lots of incentives. They’ll cover your land transfer tax if it’s your first home, different down payment options; so that would be a big thing, I’d say.
And I’d say for real estate advice, don’t listen to Americans as much; because it’s really different in terms of they’re like, “Go get a foreclosure house for 30K.” Things aren’t foreclosing in Canada the same way, because we have all this added protection for people, right? So that’s the biggest thing, I’d say. Canadian money advice goes across investing; you can learn from your American friends, you just kind of mentally have to switch like those words for like RRSP and TSA. The advice is generally applicable.
And I would say anybody who’s listening outside of the US or Canada, or even consumes HFK’s content and is Canadian and goes like, “Will this apply to me?” You always can Google whatever I’m saying, plus your country, plus equivalent. So it’s like Roth IRA equivalent, Canada; or Roth IRA equivalent, UK; and you will find information about that. So there’s ways that you can take the kinds of advice that we give at Her First $100K if you live outside of the United States and make it work for you.
Mal, I’m so excited. The audience is going to continue to get to know you. What are you excited about most coming into the HFK fold, and what are you excited to teach everybody?
Good question. Okay. I’m excited to bring and teach my slower approach to counter. You know what you’re talking about. You know you go fast and hard; I’m excited to bring that energy, because your team will be like, “What is wrong with her?” But I think also-
I’m not excited to teach your audience anything; I’m excited to teach you personally, Victoria Dunlap, how to slow the down.
With love, you know?
With love, sure.
No, but I’m excited to bring that side. I’m excited for the Canadian representation, because I don’t think there’s enough money conversations for Canadians-
… and we get left out on that stuff for no good reason. So I’m really excited to talk about that Canadian side to offer the resources and tools. There’s a lot of cool stuff available to Canadians, and those are the fun things. I like to be kind of like… Josh calls it the gateway drug, where I’m just going to plant those seeds and you can run with it; and as an audience member, go learn further about those things. I’m excited to learn about real estate, because I also don’t think there’s enough women in real estate and it’s a really exciting space. I have a little new journey coming up with real estate investing that I’m excited to share about as well.
But I’m also on the flip side, just so honored to be part of it. I think it’s such a cool thing. I love cheering you on from the sidelines. Even if I’m quiet around social these days, I am always cheering for you. And I just love seeing all the people impacted, whether it’s the Facebook group, the TikTok comments; seeing all the good that people have been able to do. Even though, like you said, that 80% feels out of our control, the 20%, you are helping people max out that 20% they can do.
Thanks. That’s the whole goal is controlling what we can control and working to change the rest. Mal, you know I love you. I appreciate you. Thanks for being here. Obviously you can find Mal now creating some content, contributing to Her First $100K both on our Instagram; I think on our TikTok, we’re still working that out, but you’ll see her face more and more. Where can people find you and what you’re doing?
Yeah, pretty much. Everything’s Mallory Rowan, so on Instagram or TikTok, or my website’s malloryrowan.com.
Amazing. I love you. Thanks for being here.
Love you. Bye.
Thank you again to Mal as always for joining us. Please make sure to follow her on social media, and of course keep an eye on the Her First $100K social accounts, which are linked in the show notes; because Mal will be sharing more of her journey as an entrepreneur; more tips about managing finances in a partnership or in marriage; more advice around real estate; and, of course, more Canadian personal finance tips. Thanks for tuning in financial feminists. I’ll see you next week.
Thank you for listening to financial feminists at Her First $100K podcast. Financial Feminist is hosted by me, Tori Dunlap; produced by Kristen Fields; marketing and administration by Karina Patel, Olivia Coning, Cherise Wade, Alina Helzer, Paulina Isaac, Sophia Cohen, Valerie Oresko, Jack Coning and Ana Alexandria; researched by Ariel Johnson; audio engineering by Austin Fields; promotional graphics by Mary Stratton; photography by Sarah Wolfe; and theme music by Jonah Cohen Sound. A huge thanks to the entire Her First $100K team and community for supporting the show. For more information about Financial Feminist, Her First $100K, our guests and episode show notes, visit financialfeministpodcast.com.