Most Canadians agree that TFSAs and RRSPs are “crucial” to their savings strategies, but many don’t know how either account works, according to a survey from Toronto-Dominion Bank (TD).

Fifty-nine per cent of respondents to the TD survey said TFSAs are crucial to their savings, and 57% said the same for RRSPs. But more than a quarter of Canadians (27%) said they don’t know the differences between the two investment accounts.

For example, 22% of respondents said they would invest in a TFSA in order to reduce their taxable income — a benefit that TFSAs do not offer. Thirty-five per cent admitted they don’t understand the tax implications of a TFSA.

The numbers weren’t much better for RRSPs, with 30% of respondents saying they didn’t understand the tax implications.

Twenty-five per cent of first-time homebuyers thought RRSPs were ideal for saving for a down payment; the federal government does allow first-time buyers to use RRSPs for down payments. But 15% of current homeowners thought RRSPs were the best way to save for their next home, despite the tax implications.

“The survey data show that many Canadians do not fully understand key characteristics of a TFSA and an RRSP, such as the tax benefits and withdrawal considerations,” Jenny Diplock, associate vice president, personal savings and investing at TD, said in a statement.

The online survey was conducted by Ipsos from Dec. 17 to Dec. 19, 2019. It polled 1,500 Canadians aged 18 and older. Online surveys can’t be assigned a margin of error because they do not randomly sample the population.