TFSA: Great Investment Tool or Waste of Time?

Retirement Income Planning, Calgary

TFSA: Is it worth it for you?

What is a TFSA, or a TSFA as my mother incorrectly calls it? It stands for Tax-Free Savings Account. If you are not careful this thing could end up costing you more than you'll ever gain. This savings vehicle was introduced by the government in 2009 with a maximum contribution room of $5000 for that year. Each year we've been allotted another amount. The maximums have changed over the years and now the total contribution room has grown to $46,500. This carries forward from year to year until you use it.

The Big Idea Here: 

There is no Tax deduction or bonus for putting money in, but once in, there isn't any tax payable on any growth that occurs on your money inside the account. Unlike with RRSPs, when you withdraw money out of your TFSA you are not taxed. The government designed these accounts to encourage Canadians to save more money! Consider this: If you do not have any growth on the money in the account then it's purpose has been defeated. The tax that you would owe on no growth is zip, zero, nada so you might as well use your additional savings to pay down your mortgage, at least you will be saving interest charges. Most people with bank held TFSAs have their money invested in what is deceitfully termed a "High-Interest Savings Account". Ha! That's bank marketing genius folks! Don't fall for it! Those accounts are currently paying 0.55% which means on a $10,000 deposit you will make a whopping $55/year. Pointless!! There are better investments for you than that. Talk to us! 

Want to retire in the next few years? Find out why a Retirement Income Plan is necessary.

The Greedy Banks: 

As of this year many of the banks are charging you for having the dang thing. Talk about adding insult to injury. They want you to open one of these accounts - charge you an annual fee for having it - put you a lousy low-interest bearing investment - and then charge you if you want to take your money out of it. It's a lose-lose-lose for you and a win-win-win-win for the banks (they get 4 wins because they are taking your money and loaning it to others and making 3% or so). If you are not making money on your money there isn't any advantage to having a TFSA. Remember: you have to make your money work for you.

What we see regularly:

In our first meeting with clients, we are seeing that many people do have a TFSA at their bank. They usually don't know what it is or how it works or, worst of all, what it's invested in. The TFSA is an awesome savings vehicle and you should use it to your full advantage, not the banks. We have TFSA's in our practice, and there is no annual account fee and no fee if you want to leave us - which you won't :-). Oh ya, and we had some pretty sweet returns in 2016.

Be Informed and stay informed, after all, it is your money! Complete the form below if you have a question or a request.

Want to retire in the next few years? Click here to Book Your $149 Retirement Readiness Assessment

Upcoming Workshops - Click Here!

Your Trusted Advisors,

Willis & Nancy

Share This Post:

Related Posts

Latest Testimonial

I contacted Langford Financial to see if they could help me with specific questions on retirement & estate planning, efficient tax strategies, CPP and OAS benefits, and income drawdown strategies. I was very nervous at first about whether they would be a good fit for my needs, but my concerns were quickly put to rest and Willis and his team made me feel at ease right from the very first meeting.

They are very easy to work with, are very knowledgeable and resourceful, are able to break down complex matters into an easy-to-understand manner, and are always quick to respond to any questions. They reviewed my situation and were able to tailor a plan to fit my specific needs, to my complete satisfaction.

The plan included amongst other things, the best way to utilize efficient income tax strategies. helped me to understand the correct drawdown of assets which would result in larger savings, and provided guidance on insurance products and efficient estate planning.

As a result, I have a much clearer picture of my financial situation now and feel very confident and satisfied with the plan that they have proposed for me, going forward. What I appreciated the most about Willis and his team was that, in addition to their friendly, personable and professional approach, at no time was there ever any pressure to purchase any products.

I am very happy with the service I received from Willis and his team and would recommend Langford Financial to anyone looking for advice on their retirement planning needs. You will not be disappointed!

Naila Jinnah

Naila Jinnah
Fee-Only Planning Client

Contact Us

Questions? Comments? Call us today at 587-755-0159 or fill out the form below:

Have Questions? Call Us Today At

Call Us

Join Our Newsletter