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Many people think a Tax Free Savings Account (TFSA) is mainly for retirement savings, but it’s a great tool for both short and long-term savings goals. With a valid Social Insurance Number, Canadians aged 18 or older can open a TFSA, regardless of earned income, and start making contributions right away.
What is a TFSA?
A TFSA is a savings account that offers tax-free growth for funds that can be used for retirement savings or shorter-term needs. Contributions are placed into eligible investments and, while not tax-deductible, any income derived from investing the funds is tax-free.
Do you need a TFSA?
Unlike traditional savings accounts that yield little to no returns, TFSAs can be invested in the money markets and earn money for you while being at arms-length*. TFSAs can be set up so money can be taken out at any time but usually requires two days to transfer into your account*.This accessibility makes a TFSA a much more flexible tool than an RRSP.
The flexibility and benefits of a TFSA make it an essential part of a balanced savings portfolio.
Ready to open a TFSA? Book an appointment or come into a branch today!
*Dependent on the types of investments chosen for the TFSA. Talk to your financial advisor for more details