Apparently most investors are using their TFSAs for safe instruments such as GICs and high interest savings account, even though they are eligible for equities, such as stocks and bonds. I’ve seen a couple of instances where the name “Tax Free Savings Account” was blamed because it contains the word “savings” which apparently is confusing. Gordon Pape brought it up in his article and Jonathan Chevreau wrote a whole post on the theory.
For some background, here is my post on TFSA rules.
The name has nothing to do with it – think about this – RRSP is a very successful account used by many Canadians. What does the “S” in RRSP stand for? Wait for it….yes, “Savings”! Read More…
I’ve made contributions across gic, savings, rrsp, and bonds. So i’m in good shape 🙂 🙂
I wish banks paid better interest.
Actually be careful when you say $15,000 is available for 2011 since it also depends on how much isnt used from prior years.
Yes. i believe it is an additional $5000. So, depending on your prior contributions and the interest earned, your contribution room will be different.
Is this year’s tfsa contribution room another $5000?
I guess i am the only one on the planet that doesnt know what tfsa even means 🙁
I’ve only used it for RRSPs.
The main problem with it is that the contribution space is tiny. Until it is pushed up to fit more i dont see why anyone would use it for anything but as a true savings account.
You can use tfsa with stocks? That’s new to me.
I agree that the main problem has to do with marketing. At least that is why i have been inclined to only use TFSAs with GICs.
The reasoning is simple. Why should i when the interest rate offered isn’t any better across different instruments?