A wonderful new opportunity…that many people waste
Tax Free Savings Accounts (TFSA) were introduced in the 2008 budget, and went into effect in 2009, so they have been around for a few years now. According to a CIBC poll, almost half of Canadians have opened a TFSA, but there is still a lot of confusion about just what a TFSA is, and how to use it.
The problem may start as early as the third and fourth words of the name of this savings and investment vehicle. People are of course attracted to anything that has the words “Tax Free” in it, but in this case they seem to focus on the “Savings Account” part of the name. According to ING, almost half of Canadians have their money invested (using the term rather loosely) in a savings account. While I’m not going to disparage anyone for saving money, I will point out that that is generally not the best way to use a TFSA; putting money into a savings account within a TFSA is squandering an opportunity to make the most of this vehicle.