Your Income Range
Regular Investment
Rate of Return
Lump Sump
Term of Investment
  (In Years)
For illustrative purposes only, not for financial planning. Please read the assumptions.
Tfsa Information
Further Reading
Stay informed
Subscribe Using RSS
Get Your Free TFSA Report

Dear Visitor,

Can you use an extra $11,000 more in savings?

Chances are you can. The average Canadians money is tied up in paying off debt, owing $9,000 on a line of credit and $2,400 on credit cards! However, did you also know that the Finance Department estimates that contributing $200 a month to a Tax Free Savings Account (TFSA) for 20 years would result in about $11,000 more in savings than if the investment was made in a regular savings account!

Even in these tough times some people are heralding the TFSA as the single most important personal savings vehicle since the introduction of the Registered Retirement Savings Plan (RRSP).

Now that you are convinced that it is a good idea to open a tax free savings account the questions that naturally come to mind are:

"Where do I open the TFSA?" and "How do I choose from the options available in the market?"

These are indeed tough choices, it is not an overstatement to suggest that there are many choices available to Canadians. Luckily, if you are reading this then you have somehow found your way to TaxFreeSavingsAccountInfo.com, Canada's Premier TFSA Information Source!

Have you downloaded your Special Independent Review of the Tax Free Savings Account yet? Just fill out your name and e-mail address in the blue box on the left side of the screen. And REMEMBER to check your inbox (and spam folder) for e-mail verification..

More Details »

How To Maximize your Tax Free Savings Account

April 8th, 2010

How To Maximize your Tax Free Savings Account

It is one thing to be provided with a gift, and quite another to learn how to make the most use of it.  A common complaint is the dearth of cash, especially after the holiday season.  Ottawa’s answer to this was the Tax Free Savings Plan, introduced in the 2008 federal budget, effective from 2nd January 2009. Many are aware of this financial innovation, yet, not everyone has the savvy to optimize it. Studies actually bear this out. It is advisable to educate oneself in order to benefit to the greatest extent possible from the TFSA.

So many thousands of people signed up for this account since October 2008.  Home prices fell, and so did the stock markets, bringing RRSP values down too.  Canadians seem to be realizing the importance of saving money for a rainy day as well as personal splurges. It has been predicted that Canadians would sock away up to US $ 115 billion over 5 years from 2010.

Yes, one can put away money, but how does one maximize one’s savings?  Especially during the proverbial post-holiday cash crunch, as in the aftermath of an extravagant December of the previous year!  Financial experts have come up with ways to work the TFSA to everyone’s advantage. Very few investors are aware that contributions in kind are permissible, like stocks.  To elucidate, if someone cannot come up with $5000 cash, he or she can transfer a non-registered investment into the account.

There are pros and cons to doing this and one must be conscious of the tax repercussions.  Opting for this course of action eliminates the need to come up with cash, at the same time, if a stock is transferred at a higher price, the gains are taxable, but if transferred at a lower price than what was paid, a tax loss cannot be claimed. Here, one can sell the non-registered stock, invest the money in the TFSA and wait 30 days so the loss rules elapse (which would apply if an identical stock was purchased)

Another key optimization strategy was the swap.  If an investor had $5000 in a TFSA and $5000 in stocks and wished to free up some cash for some purchase, he could withdraw the cash and replace it with the stocks of the same value. This facility increases the wealth growth aspect of the TFSA. How does this happen? It is best illustrated with an example: Say a person takes $5000 out of his account in cash and replaces it with $5000 of stocks.  The stocks appreciate in value to $20,000 (in an ideal world!). If the stocks are withdrawn at this point, it leaves a residual contribution room of $20,000!

The downside to this would be the waiting period until January of the following year before the investor can re-contribute, thus losing tax-free growth in the interim. The smart thing to do here would be to swap the stocks for cash, thereby capturing the new contribution room. (It should be noted here that a TFSA swap is likened to an RRSP swap. Both feature acquisition and disposal of property at fair market value.  Capital gains arising are taxed; capital losses cannot be claimed).

Unfortunately, the Finance Department has recently introduced an amendment whereby swaps have been banned, as some overuse of this avenue was noted.  But one can still sell assets in one account and re-buy them in the TFSA and withdraw, thus minimizing the tax burden, but this is the more expensive route than swaps.

Another option is to sell the stock in the TFSA for $20,000.

So a TFSA is more than just an account into which one deposits $5000 and forgets about it.  As can be seen from the above, one can use creativity and generate more wealth than that from tax savings alone.

Advice | , , , , , , , , , , , | No Comments »
Most Canadians Adopting TFSA for Rainy Day

July 1st, 2009

The HSBC Savers Survey found that 84 per cent of Canadians have some savings put aside.

This percentage is up dramatically compared to a 2006 HSBC survey, which found that only 67 per cent of Canadians had funds put away for the future or an emergency. The percentage of Canadians that indicated they have savings varied somewhat across the country:

– Albertans have the highest savings rate with 92 per cent indicating they have some savings
– Atlantic Canada has the lowest rate of savers at 77 per cent
– The percentage of Quebec savers was 80 per cent
– The savings rate for BC residents is 84 per cent, in line with the national average
– 89 per cent of Manitoba and Saskatchewan residents claimed to have savings
– 86 per cent of Ontario residents had some savings put away

The survey found that 88 per cent of Canadians are already aware of the TFSA, with 68 per cent of them saying they plan on opening an account. Of those planning to open a TFSA, 70 per cent say they would use it for general savings and retirement planning while 23 per cent see it as a good vehicle for emergency funds.

Younger people (defined as those aged 18-34) who plan to open a TFSA intend to use the account for general savings, emergencies or education. This is in contrast to older Canadians aged 34-54 who, according to the survey, are more likely to see their TFSA as part of their retirement savings.

34 per cent of those who plan to open a TFSA intend to open a high-interest savings account. This is especially true for younger respondents (aged 18-34) and for residents in Ontario. 15 per cent will be using their TFSA for Guaranteed Investment Certificates (GICs) or term deposits. 16 per cent anticipate using the TFSA for mutual funds or stocks and bonds, and 36 per cent intend to use a combination of all these investments and savings instruments.

The current economy also seems to be having an effect on TFSA awareness. 20 per cent of respondents indicated that economic conditions have in fact increased the likelihood that they will open a TFSA in the near future. The HSBC Savers Survey of 1,000 Canadians was conducted in February 2009 by the national market research data collection firm Opinion Search.

Advice | | 1 Comment »
TFSA News and Stats At-A-Glance

June 27th, 2009

ING Leaps Out of the TFSA Gate Strong

ING Direct says about 170,000 customers have signed up since early October.

Royal Bank is Happy with Numbers

At RBC Direct Investing in Toronto, for example, Donna Nelson, vice-president of strategy, says more than 2% of her company’s clients opened TFSAs in the first two weeks of January — an impressive number considering RBC Direct Investing is one of Canada’s leading online brokerages.

RBC’s annual RRSP poll, conducted by Ipsos Reid, showed only eight per cent of Canadians who plan to open aTFSA intend to reduce their RRSP contributions.Some 36 per cent of those aware of theTFSA say they will maximize contributions to both accounts, while 23 per cent plan on moving money from non-registered accounts into aTFSA instead.

The general thought is to invest insideTFSAs for shorter-term things like a vehicle or special vacation, while putting funds into RRSPs for long-term retirement. Yet the RBC survey indicated 44 per cent of Canadians who intend to op en a TFSA want to use it for retirement, including 53 per cent of Canadians aged 18 to 34,and 57 per cent of those between 35 and 54.

Scotia Bank is Happy About TFSA

Scotiabank’s launch of the new Tax Free Savings Account exceeded expectations. More than 157,000 new accounts were opened in the first month, with more than half of these accounts having an average balance of close to $4,300. The supporting $5,000-a-day giveaway contest generated more than 107,000 entries.

CIBC Predicts Multi-Billions of Dollar Savings

CIBC World Markets report – the investment house predicts Canadians will squirrel away US$20-billion in the coming year and US$115-billion in the next five years.BMO says TFSA Popular with 65+

According to a survey from BMO the new Tax-Free Savings Account is most popular with Canadians 65 and older. One-third of people 65 and older have opened a TFSA and one-quarter of those 55 to 64 have an account. Fifteen per cent under the age of 45 have a TFSA. Forty per cent of Canadians say their retirement is their savings goal for their TFSA.

20% Interest Amongst Canadians

For a country as highly taxed as Canada amazingly only 1 in 5 Canadian adults has yet to claim their latest and possibly greatest tax break, the Tax-Free Savings Account (TFSA).

According to a Leger Marketing survey 78% of 1,541 Canadians polled had not opened up a TFSA as of mid-March 2009. Of the majority that does not yet have a TFSA account, 44% cite lack of money for not taking advantage of the accounts.

Those earning less than $40,000 a year are even less likely to take advantage of this tax break: 60% of this group blamed lack of funds; 57% of widows and divorcees also cite lack of money as their reason for not opening up a TFSA. TaxFreeSavingsAccountInfo argues that you can’t afford NOT to open up a TFSA.

According to Wilmot George, director of tax and estate planning for Mackenzie Financial Corp., 47% of Canadians consider the tax-free savings of TFSAs to be their most appealing feature, a percentage that hits 62% for those who already have one.

However, 20% of TFSA holders aren’t sure how they will use them and 19% expect to use them only for emergencies.

More than half (51%) are using them for short-term savings, held in cash, money market mutual funds or short-term GICs. But 36% plan to use them for long-term goals such as retirement or education. Cash and cash equivalents are not the most suitable way to invest for the long term, George says.

The Leger Marketing online poll was conducted from February 5 to 9, 2009 and is based on a sample of 1,502 Canadians aged 18 and older. The margin of error for a sample of this size is +/- 2.5%, 19 times out of 20.

Average Dollars Invested

The results of a survey conducted by teleVox, Harris/Decima are based 1,012 interviews between March 5 and 8. The margin of error of 3.1%, 19 times out of 20.

17% of Canadians invested in new tax-free savings accounts (TFSA), contributing about $3,471 each of the maximum eligible amount of $5,000, the survey found.The survey also found that 16% of Canadians decided to “park” their RRSP contributions in 2008 “by investing in short-term and typically low-risk vehicles, such as bonds and money market funds,” Investors Group said. That’s up from 14% the previous year.

“Of those who park funds, 36% say they will park their investment for one year or less, 39% for more than one year,”it said.

Advice | | No Comments »

TFSA Special Review

Were All Tax Free Savings Accounts Created Equal?

The answer is definitely NO!... but with so many different options available for Tax Free Savings Accounts, how does one go about choosing the best one for them? Find out the answer to this question by ......

More Details »


TFSA&Kids »

Read more information about the TFSA
  More Details

TFSA Couples »

Find the best TFSA strategy for couples
  More Details

TFSA Seniors »

Make the most out of retirement with the TFSA
  More Details