Almost half of all Canadians have opened a tax-free savings account, according to a survey released last week by CIBC.
That’s a remarkable take-up considering that TFSAs haven’t even been around for four years. That’s the good news.
The bad news is that about half of those people aren’t actively contributing. According to the survey, 47 per cent have not put any money into the plan this year.
What’s more, a large number of TFSA holders — 41 per cent — say they have no clue what they will do with the money. Read More…
Yea, now if we can just get people to “keep” the money in their tfsas then all in the world will be perfect.
The problem is that with people like me we end up needing the cash and so we take it out before the end of the year and so the savings we could have got are not fully realized.
I wish they had tfsa services here in the US. Well at least i have never heard of them here. It would potentially solve some of the issues of people spending more than they save — this would insentivise us to save more.
You Canadians and your cleverly wacky inventions 🙂
I was one of the unlucky ones to have contributed and withdrawn and recontributed without realizing about the issue of overcontribution. Now i know.
Thankfully cra didn’t penalise me cuz they noticed it was my first time (first year of tfsa introduction)
TFSA has been around for 4 years so at the minimum one can contribute at least $20,000 to that account. Mine is about $37,000 due to prudent investing. Everyone should make use of it. It only gets better with time — more room means more tax-free money in the future.
A better approach would be to max out RRSP and then anything that remains to start maxing out your TFSA. And the rest just sits in a high-interest savings account such as at Peoples Trust.
That is what i do.
I have never heard of Tax-Free Savings Accounts until i read this post. Yikes for me!
I remember fuming when i found out that they’d only be increasing the yearly limit to $5K. But after what like 4 years i still havent contributed to fill it. So hahahaha.
You raise an interesting point @barney and i think CRA should consider some space to allow for those who do contribute. Sort of like they do with RRSPs with the $2,000 overcontribution limit.
And how many of those have overcontributed to the point that their tax free interest is now being penalized by CRA and they dont know about it.
It truly amazes me that there are people still out there who prefer GIC’s over TFSAs.
Most GICs are at lower interest rates and they keep you locked in for the set time period. I see no point in them. Especially when most banks have higher rates for TFSAs.
Wow half of Canada! I am not one of them 🙁
The smarter investor would open a registered account at a discount broker like questrade or whoever and put their tfsa funds there. At least that way it can benefit from higher returns as the markets rise.
I think its funny that it discusses this with CIBC and CIBC has lousy rates for TFSA accounts. Go figure!