Glossary of Canadian investing and retirement terms

Updated November 2026

Short, plain definitions of the terms you will meet when saving and investing in Canada. Figures quoted are for 2026 and change most years.

A to C

Adjusted cost base (ACB)
What you paid for an investment, including purchase costs and adjusted for things like reinvested distributions. In a non-registered account you subtract it from the sale price to work out a capital gain or loss.
Annuity
A contract, usually with an insurance company, that turns a lump sum into regular payments for a set period or for life. It is one of the three options for an RRSP by the end of the year you turn 71 (see Retirement income).
Asset allocation
How your money is split between stocks, bonds and cash. It drives most of a portfolio's risk and return.
Attribution rules
Tax rules that can tax income or withdrawals in the hands of the person who supplied the money rather than the account holder – for example when a spousal RRSP is cashed in the same year as, or within two calendar years after, a contribution to any spousal plan.
Benchmark
An index used to judge a fund's performance, chosen to match what the fund holds (see Evaluating a fund).
Bond
A loan to a government or company that pays interest and returns your money at a set date. Bond prices fall when interest rates rise, and rise when rates fall.
Canada Education Savings Grant (CESG)
A federal grant paid into an RESP: 20% of the first $2,500 contributed each year, up to $500 a year and $7,200 per child in total (see RESP grants).
Canada Learning Bond (CLB)
Up to $2,000 paid into an RESP for children born in 2004 or later in low-income families, with no contribution required.
Canada Pension Plan (CPP)
The contributory public pension for workers outside Quebec. You can start it at any age from 60 to 70; it is smaller if taken before 65 and larger if taken after (see CPP, QPP, OAS and GIS).
Capital gain
The profit when you sell an investment for more than its adjusted cost base. Outside registered accounts, one-half of a capital gain is added to your taxable income.
Carry-forward
Unused RRSP, TFSA and (within limits) FHSA contribution room is not lost; it carries forward to later years.
CIPF (Canadian Investor Protection Fund)
Protects clients of member investment firms if the firm becomes insolvent, up to $1 million per account category. It does not cover market losses or crypto assets.
CIRO (Canadian Investment Regulatory Organization)
The national self-regulatory body for investment dealers and mutual fund dealers, formed in 2023. Its AdvisorReport tool lets you check an advisor's record (see Choosing an advisor).
Compound growth
Earning returns on your past returns as well as on your original money (see Compounding).
Contribution room
The amount you are allowed to put into a registered account. For an RRSP it is shown on your Notice of Assessment and in CRA My Account (see Contribution limits).

D to H

Deduction limit (RRSP)
The most you can deduct for RRSP contributions in a year: unused room plus 18% of last year's earned income, up to the yearly dollar limit ($33,810 for 2026), minus your pension adjustment.
Deferred sales charge (DSC)
A fee charged when you sold a mutual fund within several years of buying it. New DSC sales have been banned in Canada since June 1, 2022 (see Mutual funds & ETFs).
Defined benefit (DB) pension plan
An employer pension that promises a set income in retirement, usually based on your years of service and salary.
Defined contribution (DC) pension plan
An employer pension where you and your employer put in set amounts; your retirement income depends on how the investments perform.
Diversification
Spreading money across many investments so that one failure cannot sink your savings.
Dividend
A share of a company's profits paid to shareholders, usually in cash.
Dividend tax credit
A tax credit on dividends from Canadian corporations held outside registered accounts, which offsets tax the company already paid. Foreign dividends do not qualify.
Dollar-cost averaging
Investing a fixed amount at regular intervals regardless of price (see Dollar-cost averaging).
Earned income
The types of income that create RRSP room, mainly employment and self-employment income and net rental income. Investment income and pension income do not count.
ETF (exchange-traded fund)
A fund that trades on a stock exchange like a share. Most ETFs track an index and have low fees.
ETF Facts / Fund Facts
Short standard documents that every ETF and mutual fund must publish, showing holdings, risk rating, returns and costs.
FHSA (First Home Savings Account)
A registered account for first-time home buyers: contributions up to $8,000 a year ($40,000 lifetime) are deductible, and qualifying withdrawals for a home are tax-free (see FHSA).
GIC (guaranteed investment certificate)
A deposit with a bank or credit union for a fixed term at a set interest rate.
Guaranteed Income Supplement (GIS)
A monthly, non-taxable benefit for low-income Old Age Security pensioners. Because it is income-tested, RRSP and RRIF withdrawals can reduce it; TFSA withdrawals do not.
Home Buyers' Plan (HBP)
Lets you withdraw up to $60,000 from your RRSPs to buy or build a qualifying home, repaid over 15 years (see Home Buyers’ Plan).

I to O

Index fund
A mutual fund or ETF that holds all (or a sample) of the investments in a market index instead of picking.
Inflation
The general rise in prices, which reduces what each dollar buys over time.
Lifelong Learning Plan (LLP)
Lets you withdraw up to $10,000 a year ($20,000 in total) from RRSPs for full-time training or education, repaid generally over 10 years.
LIF (life income fund)
A RRIF-like account for locked-in pension money, with both a minimum and a maximum yearly withdrawal set by pension law.
LIRA (locked-in retirement account)
An account that holds pension money transferred from an employer plan when you leave a job. Withdrawals are restricted until retirement, except in limited cases allowed by pension law.
Management expense ratio (MER)
A fund's yearly management fee and operating costs, expressed as a percentage of its assets and deducted before returns are reported.
Marginal tax rate
The combined federal and provincial rate on your next dollar of income. It is the rate that determines your tax saving from an RRSP deduction (see Tax planning).
Mutual fund
A pooled investment bought from a fund company or dealer, priced once a day.
Notice of Assessment (NOA)
The CRA's statement after it processes your tax return. It shows your RRSP deduction limit for the next year.
OAS (Old Age Security)
A monthly federal pension from age 65 based on years lived in Canada, not on work history. You can defer it to 70 for a larger payment.
OAS recovery tax ("clawback")
A repayment of 15% of net income above a threshold ($95,323 for the 2026 income year), which reduces or eliminates OAS for higher-income seniors.
OBSI (Ombudsman for Banking Services and Investments)
A free, independent service that investigates complaints against banks and investment firms after the firm has had a chance to respond.
Over-contribution
Putting more into a registered account than your room allows. The excess is generally taxed at 1% a month (RRSPs allow a $2,000 cushion).

P to S

Pension adjustment (PA)
The value of benefits you earned in an employer pension plan in a year. It reduces your RRSP room for the following year and appears on your T4.
Pension income splitting
Allocating up to half of eligible pension income to a spouse or common-law partner on your tax returns (Form T1032). RRIF income qualifies from age 65; CPP and OAS do not.
Probate
The court process that confirms a will and the executor's authority. Fees and procedures vary by province (see Estate planning).
QPP (Quebec Pension Plan)
Quebec's equivalent of the CPP, run by Retraite Québec.
Registered account
An account registered with the CRA that gets special tax treatment: RRSP, RRIF, TFSA, FHSA, RESP, RDSP and pension plans (see TFSA, FHSA and RESP).
RESP (Registered Education Savings Plan)
A tax-sheltered account for a child's post-secondary education that attracts government grants (see RESP basics).
Risk rating
The low-to-high rating on Fund Facts and ETF Facts, based on how much a fund's value has gone up and down in the past.
Robo-advisor
An online service that builds and rebalances a portfolio of ETFs for you based on a questionnaire.
RRIF (Registered Retirement Income Fund)
The account an RRSP is usually converted into to pay retirement income, with a required minimum withdrawal each year after the first (see RRSP to RRIF at 71).
RRSP (Registered Retirement Savings Plan)
A retirement account where contributions are tax-deductible and growth is tax-deferred; withdrawals are taxed as income (see RRSPs explained).
Rule of 72
A shortcut: 72 divided by the yearly return gives roughly how many years money takes to double.
Spousal RRSP
An RRSP you contribute to, and deduct, for your spouse or common-law partner, who owns it. Used to even out retirement incomes (see Spousal RRSPs).
Successor holder
A spouse or common-law partner named to take over a TFSA at the holder's death, keeping it tax-free. Quebec does not recognize this designation except for annuity contracts.

T to Z

TFSA (Tax-Free Savings Account)
An account where contributions are not deductible but growth and withdrawals are tax-free. The 2026 limit is $7,000 (see TFSA).
Trailing commission
An ongoing yearly payment from a fund company to an advisor's firm, included in the MER. Since June 1, 2022 it cannot be paid to discount brokers.
Withholding tax
Tax the financial institution takes off an RRSP withdrawal and sends to the CRA: 10%, 20% or 30% depending on the amount (higher in Quebec). It is a prepayment, not the final tax.
YMPE (Year's Maximum Pensionable Earnings)
The earnings ceiling for base CPP contributions: $74,600 in 2026. A second, higher ceiling (YAMPE, $85,000 in 2026) applies to the enhanced second tier.

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