What is a non-registered savings account?

Here’s the answer to this week’s reader question.

“What is the point of a non-registered savings account?”

—Felix

Why would I consider a non-registered savings account?

You may not be familiar with the term “non-registered savings account,” also called an NRSA, but there is a good chance you already have one: your bank account. Unlike RRSPs (registered retirement savings plans) and TFSAs (tax-free savings accounts), an NRSA isn’t a specific type of financial product—it’s a category that can include regular savings accounts, high-interest savings accounts (HISAs), and other non-registered investment accounts. Really, it’s any account that is not registered with the government to provide a tax benefit. While these accounts are taxable, they’re essential to any Canadian because they are so flexible. 

No contribution limits, no withdrawal rules—just pure freedom to save on your terms. An NRSA is a great place to put your money to work to earn interest for an emergency fund, or when your registered accounts, like TFSAs and RRSPs, are maxed out. And you can access an NRSA anytime without jumping through hoops.

As a financial advisor, I help clients bring clarity and confidence to how they structure their savings and investments—so that everything works together toward the life that they want. And for many people, a non-registered savings account becomes their short-term holding place for accessible cash. It can be used for down payments, buying a car, vacations or as an emergency fund. It’s a great way to handle life’s financial curveballs because there are no penalties for the transactions you make.

Another advantage of a non-registered savings account (compared to a registered investment account), is that it can be structured like an investing account and can typically hold a wider range of investments, like real estate or crypto in addition to stocks, bonds and/or cash. 

Early-stage investors might not need more than a cash savings account today, but it certainly becomes handy should you start diversifying down the road.

You  should remember, however, that non-registered accounts—unlike registered accounts—are subject to annual taxation, based on the interest you earn. You must report that interest come tax time. So if you receive a form from your financial institution, reporting interest and income earned on the account, that’s why

—Sajjad Hussain

President and owner of Allen Private Wealth Group and Senior Portfolio Manager and Senior Wealth Advisor at Designed Securities

Have a question for us? Send it to TheGet@neofinancial.com.

As told to Paul Saunders

Paul Saunders is a Toronto-based marketing consultant and writer with over 20 years’ experience in the Canadian investment industry.

Read more from this issue of The Get:

1. Is your fear of debt costing you?
2. MVP: Steve Abrams on having multi-careers and the sober-ish movement
3. When Canadian government benefit payments arrive and why it matters
4. True or False: A line of credit is a good emergency fund

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