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The power

of compound INTEREST

TAX-FREE SAVINGS ACCOUNT

A tax-free savings account (TFSA) is a savings program put in place by the federal government to encourage savings by taking advantage of tax-free investment income. You must be a Canadian resident aged 18 and older at the time of contribution. As of 2017, you can save up to $52,000 in a TFSA. You do not pay taxes on the interest in this account thus making your savings compound for you. Even when you withdraw the money, you are not taxed on it. TFSA can hold a wide range of investments. There are no restrictions on how you use your funds once they’re withdrawn. TFSAs are great to save for short-term goals, like a vacation, or long-term goals, like a down payment for a house.

A young investor, just starting out

  • buy a car
  • go on a backpacking vacation
  • save for a down payment on a home
  • save for a wedding
  • have an emergency account

In my peak earning years

  • save in addition to my RRSP
  • save for luxerous vacations
  • save for house renovations
  • set aside money for hobbies or personal goals

Retired

  • make withdrawals that aren’t included in your income for tax purposes
  • re-invest your unneeded required Registered Retirement Income Fund (RRIF) withdrawals

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