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TFSA (Tax-Free Savings Account) Basics - Budget on a Budget
Because everyone is busy maxing out their RRSP’s, therefore it would be fair to assume Tax-Free Savings Accounts are being neglected. If you’re in your 20’s and aren’t making much money, you should take a second look at a TFSA. First of all, like RRSP’s, TFSA’s are not a single investment. They are more of a container for your investments, and anything produced inside that container is withdrawn tax-free. Tax-Free Savings Account – Invest your earned income AFTER taxes, and the money you withdraw from the account is not taxed. Registered Retirement Savings Account – Invest your pre-tax income, and the money you withdraw from the account is taxed. TFSA Rules: Must be over the age of 18 You can contribute up to $5500 / year Any unused contribution room can be carried over to next year TFSA’s do not expire, unlike RRSP’s where you have to start withdrawing at age 71 What should you keep in your TFSA? You can hold Mutual Funds, ETF’s, stocks, bonds, etc. Some banks / Brokerages who offer TFSA investment accounts Questrade (No Fees) Scotia iTrade (No Fees) HSBC CIBC BMO TD Canada Trust RBC Just so you know – some of the bigger banks have fees associated with the TFSA. Or, you could try a TD E-Series Mutual Fund Account…