TFSA, RRSP, RESP & FHSA Contributions

The TFSA contribution limit for 2026 remains at $7,000. A Canadian Resident who has never contributed to a TFSA, and was 18 years or older in 2009, will have a cumulative total of $109,000 of contribution room.

The deadline to contribute to your RRSP and claim the deduction on your 2025 income tax filing is March 2, 2026. Your available RRSP contribution room for 2025 can be found on your 2024 Notice of Assessment from the CRA.

Contributions to a RESP can be made up until December 31 of the year that the beneficiary turns 17. These contributions attract government grants of up to $500 annually and are paid at a rate of 20% on contributions up to $2,500 per year. There is a maximum of $7,200 of grant that each beneficiary can receive in their lifetime. Unused grant room accumulates, and you can capture missed years in future years. To catch up, contribute enough in later years to use both current and carried-forward room (e.g., $5,000 in one year could capture $1,000 in grants: $500 current + $500 carried-forward).

The FHSA contribution limit for 2026 remains at $8,000. The lifetime limit on contributions to an FHSA is $40,000. Unlike a TFSA, you only begin accruing FHSA contribution room when the account is open. You can carry forward up to a maximum of $8,000 of unused FHSA contribution room to use in the following year. The deadline to contribute and deduct against your 2026 income is December 31, 2026.  

Market Update

Global markets posted strong returns in 2025, however, it wasn't a smooth ride. The S&P 500 and global stock markets experienced a significant drop in spring 2025 due to the introduction of ultra-high reciprocal tariffs by the Trump administration. But the index rallied nearly 39% from the April low to year-end as tariff rates were lowered through trade deals and a temporary truce with China. Additionally, AI companies posted strong earnings growth and raised profit forecasts.

The market was also supported by strong U.S. economic growth, with above-average GDP growth in Q2 and Q3, rebounding from a slight retreat in Q1. This was driven by an unanticipated surge in AI capital spending, three Federal Reserve 25 basis-point interest rate cuts, the passage of the taxpayer- and business-friendly One Big Beautiful Bill Act, and strong consumer spending among upper-income households. These factors helped offset the headwinds from tariffs. 

After three successive years of above-average market appreciation, delivering a fourth will be a tall order but not entirely out of the question. Whether equity market returns are “merely” positive or above average, either outcome will depend on the major economies, especially the U.S., avoiding recession and on the current consensus forecasts for GDP, earnings growth, inflation, and interest rates being in the right “ballpark.” We can see a plausible path to another year of positive gains for most major stock markets – but likely at a more sober pace. Slower earnings growth is the more likely outcome outside of the United States. GDP growth everywhere needs to shift into a higher gear than is currently embodied in consensus forecasts to lift the prospects for equity market performance beyond the “merely” positive toward “above average.”

While consensus estimates for US. 2026 GDP growth sit at only 1.9 percent, we think there are some factors at play which might push that growth rate into the potentially more rewarding zone above two percent including a rebound from the government shutdown, the lagged effect of monetary easing, and a capital spending boost from tax policy changes. AI is also very important to GDP growth expectations in 2026 and beyond because of the dramatic growth in capital spending by the big developers and the expectation that more and more successful applications of AI will emerge which promise to prompt heavy future investment by users. Meanwhile, most developed economies are running stimulative monetary and fiscal policies in the same direction of the United States. These feature rate cutting by central banks, a commitment to much higher defense spending, initiatives to boost power-generation capacity and strengthen grids, as well as to develop AI capability. They are also faced with many of the same challenges: anemic GDP growth, trade uncertainties, mounting fiscal debt burdens, and fraught politics.

Looking ahead to the next year is a necessary exercise for investors, but we think it’s even more useful to focus on investment themes that can endure for years or even decades. In the next quarter century, some themes that have emerged relatively recently should persist, and new themes have the potential to shape global economic development and drive certain sectors.

Continuation of longstanding themes: the continued ascent of China and the global middle class, demographic challenges, tech sector-driven economic growth and innovation.

Relatively new themes that may persist: multipolar world order, deglobalization, artificial intelligence, climate change, fiscal sustainability.

New themes: the prospect of diminished U.S. exceptionalism, faster productivity growth, a peak in oil demand, the rise of India and Southeast Asia.

Takeaways

In our view, the conditions necessary for the S&P 500 and other global large cap indexes to deliver mid-single-digit returns plus dividends in 2026 (rather than the 13 percent-plus aimed for in the bullish scenario) are much less demanding and more likely to occur.

As 2026 gets underway, we think portfolios should be invested up to, but not beyond, a predetermined long-term equity exposure with a plan for becoming more defensive when and if needed. We think “positive” rather than “above average” is the outcome to plan for.

Should you have any questions, please feel free to reach out.