Take advantage of your TFSA

Date Posted: August 30, 2012

A recently released survey shows that only 47% of those polled have a Tax Free Savings Account (TFSA.) Out of that 47%, only half stated they have made a contribution to the account this year. Evidence from other surveys conducted over the past few years suggests that the reason for the low level of participation stems from a lack of understanding regarding how the accounts actually work.

TFSAs were introduced in 2009, and allow savings contributions up to $5,000 per calendar year. The interest accumulated on the savings is tax-free and any unused contribution room can be carried forward to the next year. Interest rates on TFSAs tend to be slightly higher than those of traditional savings accounts, making them the perfect vehicle to save for retirement, or for the down payment on a mortgage. As with any savings plan, having a clear goal in mind will produce the best results.

For more information about TFSAs and how they work, visit The Government of Canada's website.

Click here for the full article from the Globe and Mail.