TFSAs

Tax-Free Savings Accounts (TFSAs) were introduced starting January 2009 by the Canadian government to help Canadians save more. TFSAs are very similar to RRSPs, with some differences, notably:

RRSPs > pre-tax dollars contributed & taxable upon withdrawal

TFSAs > after-tax dollars contributed & no tax paid on withdrawals

While most people save for retirement in an RRSP, the TFSA could be used to save for a downpayment on a house, a vacation, a new car, taxes (for self-employed), etc.

TFSAs can be most beneficial to high income earners who have already maxed out their RRSPs and have non-registered investments. TFSAs are also good for those in a lower tax bracket who expect their salary to increase in the future or where the tax bracket is unlikely to change from now to retirement.

Like an RRSPs,  a TFSA is just a vehicle to savings, the money needs to then be invested into stocks, bonds, GICs, T-Bills or funds (such as mutual funds or segregated funds).

We offer TFSAs with segregated fund options. For a more liquid TFSA (for a short-term goal), check with your bank for a high-interest savings account option TFSA.

For more information regarding TFSAs, check out Get Smarter About Money.ca.