How TFSA can Help You Save?

TFSA offers tax-free savings with tax-free withdrawals. The tax-free withdrawal feature makes TFSA an emergency fund that can be easily accessed any time of your financial need without thinking about taxes.  

All about TFSA?

  • There is no clause of age-specific maturity for a TFSA account.
  • If you are planning any financial investment like buying a house or car or starting a new venture in the near future or long term then TFSA is a great option.
  • Suitable if you are looking for a medium- or long-term investment.
  • There is a maximum deposit limit just like RRSP and if you do not meet your deposit limit then the remaining amount will be credited to the next year's limit. Increasing next year’s maximum deposit limit.
  • The TFSA is only for a Canadian citizen.
  • Minimum age limit for opening TFSA is 18 years.
  • To have TFSA you must have a Social Insurance Number (SIN).

TFSA can be opened in any Canadian bank or any financial institution. Then you can start your contribution and start investing in different investment product. The investment made from the TFSA contribution can be made in any type of investment product like stocks, bonds, insurance, segregated funds, or any other. The investment product you choose will entirely depend upon your risk-taking ability. The insurance advisers can give you suggestions and help you make innovative strategies depending upon market trends. The income you earn on the investments will not be taxable even after you decide to take money out from your TFSA account.    

Types of RRSP/TFSA Investment Plans

There are different investment plans available that cater to different needs. Your investment history along with your risk-taking ability will help you choose the right investment plan. The benefits that you will receive will depend upon your account’s terms and conditions.

Different plans available that can be used with RRSP/TFSA accounts are:

  • Segregated Funds: If you are looking for a less risky option and earn higher returns then-segregated funds are the right choice. Segregated funds are similar to mutual funds but save you from unpredictable market fluctuations and financial losses.
  • Daily Interest Funds: For this type of investment, interest on the investment amount is calculated on a daily basis and payment of the same is done on monthly basis.
  • Guaranteed Interest Funds: These types of funds keep your invested amount safe and reap fixed interest till your account reaches maturity.
  • High-Interest Savings Account: These plans do not impose any risk on the savings and interest is calculated on the current interest rate.

RRSP and TFSA are both regulated accounts and have their benefits and limitations. Depending upon your priorities you have to make a suitable decision. There are investment advisors who can show you the right path on which type of account you open and the investment plan you should choose. Both RRSP and TFSA help you save and invest at the same time but the benefits you avail differ. They will access your current financial condition, current income, and future financial goals and suggest accordingly. If you are looking for any type of financial guidance, we are here to assist you.