Tips for understanding investment and savings plans

FERGUS – With the New Year comes New Year’s resolutions, and plans to cut down on spending. 

The Wellington Advertiser spoke to Dan Allen, a financial advisor who specializes in retirement income and protection at Dan Allen Financial in Fergus, about understanding investments and savings plans for 2024.

“Our job is to understand the client … and then come back to them with a financial plan on how to make the most of their savings,” he said.

Allen explained that to see a financial advisor, individuals do not need to be “too young” to start. 

The one thing that financial advisors typically look for in clients are individuals who are “not looking to spend all their paycheck.

“Because once you start getting that nest egg built, it’s a little bit like a snowball,” Allen said.

“All snowmen start out pretty small. But once you put some years of compounding and saving to it, that snowball gets bigger and bigger and bigger. That’s when you get the real benefit of compounding that goes with it.”

‘Secret thunderbolt’

Allen said that there is no “secret thunderbolt” of information that can help everyone with financial struggles, but the biggest thing is people need to learn how to save and “be willing to sacrifice a little bit today for their long-term goals.”

Financial advisors like Allen are available to help individuals cut back on some spending to create a money cushion for other things.

“I think this is one of those times where people should sit down, spend an hour, look at where their money goes over a given month or a three-month period, and look at where they can cut back on stuff,” he suggested.

“The point is to make enough room to handle the surprises.”

Allen also offered some information for people wanting to understand  TFSAs, RRSPs, RESPs and RDSPs and who should invest in them.


A tax-free savings account (TFSA) is a way for individuals aged 18 or older to set money aside throughout their lifetime without being taxed for taking money out.

“One of the things that I think people should be learning to take advantage of is, particularly if their personal income is say under $60,000, the tax-free savings account is probably a bigger priority for them than RRSPs,” said Allen.

A registered retirement savings plan (RRSP) is a type of financial account in Canada for holding savings and investing assets.

“The RRSP is primarily for investments for retirement, that should be the number one goal there,” said Allen.

The financial advisor explained the whole strategy of putting money into an RRSP is that individuals will receive a tax deduction due to being at a higher income tax.

“For a lot of folks, they’re going to be in the same tax bracket if their income is between $40,000 and $60,000 as they’ll be in retirement. So, then you’re actually better to put the money in a tax-free savings account,” he said.

Allen suggests this is not “wholehearted” advice, but individuals should speak to a financial advisor to see if a TFSA makes more sense for them than an RRSP.

TFSAs provide more flexibility if an emergency comes up and money needs to be taken out of the account.

They also have limits to them, and Allen expressed that anyone who has been around since the start of TFSAs will have a limit of $95,000 while a couple will have nearly $200,000 worth of room.


An RESP is a registered education savings plan, a long-term savings plan to help people save for a child’s post-secondary education.

“The type that we use looks a lot like a RRSP account or TFSA, where for every dollar that you put in, you get 20% grant money from the government put in,” said Allen.

When the child begins to withdraw for their education, it is not taxed back to the parent. Any gross or income is taxed to the student.

“The student doesn’t have very much income so … in some cases they’re not paying any tax at all.”

“That’s a great savings tool to build up reserves for kids’ education,” Allen stated.


A registered disability savings plan (RDSP) is an account that can be made to help an individual who is approved to receive the disability tax credit. 

This is intended to help them save for long-term financial security.

“It’s a little bit more complex,” Allen explained.

The government grants on this account are $3 for every dollar put into it.

“They’re not really do-it-yourself. To make the best of this [savings plan], you should see a qualified financial advisor that can help you with how this stuff works.”

To learn more about savings and investments, contact your local financial advisor. 

Dan Allen is a financial advisor at Dan Allen Financial who specializes in retirement income and protection.