What the Typical 25-Year-Old Canadian Has Saved in a TFSA and RRSP

Vanguard FTSE Canadian High Dividend Yield Index ETF (TSX:VDY) is a fantastic buy for any long-term-focused TFSA or RRSP.

Key Points
  • In your mid-20s, focus on getting started without pressure—prioritize the TFSA over the RRSP if you’re in a low tax bracket, and invest what you can after covering living costs and debt.
  • Keep it simple with high-quality, reasonably valued holdings; a dividend ETF like VDY can be an easy starter option, offering broad exposure to Canadian dividend payers with a ~3.2% yield and strong recent performance.

For someone in their mid-20s, it’s more about meeting the high costs of living or even paying off some of that student loan debt, rather than stashing away some extra cash for that TFSA or RRSP.

Indeed, for those with some extra dry powder to invest after paying off the bills with a paycheque, contributing to a TFSA or RRSP and investing the proceeds is a very wise move that would put one well ahead, perhaps even miles ahead, of most people in their age group. Indeed, it’s a good idea to get started as soon as humanly possible. But for someone who’s around 25 years old, there’s certainly no pressure, especially since one’s career is just getting started.

pregnant mother juggles work and childcare

Source: Getty Images

Starting to invest in one’s mid-20s is wise

With decades of paycheques likely to come flowing in (or maybe AI will start cutting some cheques in the distant future), beginner investors certainly have time on their side and, with that, smart risks can be taken. By smart risks, I mean high-quality growth stocks that have what it takes to keep growing profits at an above-average rate, rather than a speculative AI IPO that’s really hard to value. Any way you look at it, the age of 25 is a fantastic time to get started investing.

And while you don’t have to go for growth, many do choose to, especially given the explosive momentum we’ve witnessed across the tech and AI scene in recent years. Of course, valuation should not go ignored, no matter how impressive the narrative is or the potential total addressable market (or TAM).

While it can be hard to avoid the fear of missing out (FOMO) on a red-hot stock that only seems to know how to move higher, new investors should focus on investing in what they know and what can be identified as undervalued in a market where there’s surely no shortage of those willing to speculate. Indeed, there’s a fine line between speculating and investing. And, for new investors, I hope you choose to invest rather than take a chance on something that could lead to losses very quickly.

Don’t sweat it as a younger investor. Just have a plan and get started!

For someone in their mid-20s, I expect maybe something in the ballpark of $10,000 in the TFSA. As for the RRSP, maybe something similar? It’s hard to tell. Either way, with inflation raging and affordability becoming a growing concern, I think there’s no pressure to top up either account.

For someone who’s younger, I do think the TFSA is a better account to prioritize than the RRSP, especially for students engaged in part-time employment.

Why? These folks can expect to make more with time, not less. And, with that, RRSP contributions made when one is in a lower tax bracket, I think, make less sense, given the risk of getting dinged more from a withdrawal when one’s in a much higher bracket in a few years down the road.

As for what to invest in, I like something simple, like the Vanguard FTSE Canadian High Dividend Yield Index ETF (TSX: VDY). It’s a potent basket of dividend payers, and while new investors should prioritize growth over income, I do think that it’s nice to get a feel of how dividends and dividend growth can work for you, especially when capital gains become harder to come by.

As it turns out, the VDY has been crushing the TSX Index of late, thanks to its exposure to Canadian banks and pipelines. These days, dividend payers also gain greatly! With a nice 3.2% yield and a whopping 22% gain in the books for 2026 so far, perhaps the VDY ought to be a go-to for new investors who want the best of both worlds.

Fool contributor Joey Frenette has positions in the Vanguard FTSE Canadian High Dividend Yield Index ETF. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Investing

Natural gas
Energy Stocks

A Perfect TFSA Stock: A 6.5% Payout Each Month

Peyto Exploration and Development is growing its dividend as natural gas fundamentals continue to improve.

Read more »

senior man and woman stretch their legs on yoga mats outside
Dividend Stocks

Best Monthly Dividend Stocks on the TSX? My Top Picks for Today

Looking for monthly dividend income and an attractive growth profile? These two TSX stocks are my top picks today.

Read more »

A meter measures energy use.
Energy Stocks

Canadian Utilities vs. Hydro One: Which Dividend Stock Would I Hold for 15 Years?

A proposed merger changes the Canadian Utilities comparison, while Hydro One still requires price discipline.

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Thursday, November 12

Rising natural gas prices could help TSX energy stocks extend their gains today, while falling oil, gold, and silver prices…

Read more »

pig shows concept of sustainable investing
Stocks for Beginners

How I’d Turn Quarterly Bank Dividends Into a Monthly Paycheque

Quarterly bank dividends can fund regular monthly transfers without choosing stocks for payment dates.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Energy Stocks

Retirees: How to Use Your TFSA to Earn an Average of $386 in Monthly Tax-Free Income

This TFSA strategy can help boost average returns while reducing risk.

Read more »

man studies at computer
Dividend Stocks

Here Are The 3 Canadian Stocks I’d Tell a New Investor to Buy ASAP

Discover strategies for investing in stocks that can help you thrive in a market filled with volatility and uncertainty.

Read more »

oil pumps at sunset
Dividend Stocks

Canadian Natural Resources vs. Suncor: The Dividend Stock to Own Through 2026

Let’s compare Canadian Natural Resources and Suncor Energy across their financial performance, dividend track records, growth prospects, and valuations to…

Read more »