TFSA- What should you know?
One of the easiest ways to save money is to open a
tax-free savings account (TFSA), but not everyone knows how it works. To help
you understand this, I decided to touch on the most basic questions about the
TFSA account.
Let's start from the base, what is TFSA?
This is a savings account where there is no tax on investment income and capital gains. Yes, and withdrawals are also tax-free! Yes, CRA completely exempts this account from taxes.
Where can you open such an account?
You can open it at any bank or financial institution. My advise to you is to consider opening an account with an insurance company, where you will find investment products of such a broad variety the bank cannot always offer you. I can offer you both redeemable investments and non redeemable, both guaranteed and not. To understand the difference between these options, please contact me, my consultations are free.
Why should I go to an insurance company when I can open a TFSA account with my bank?
I often hear:
– “I opened a TFSA in a bank”
- “And where did the bank invest your money?”
– “In TFSA”.
Poeple do not know where the bank put their money, for how long and with what conditions. Many banks guarantee a profit of 0.5%-1%, but are you sure that this is the real percentage that they have from your money? The answer is obvious. In an insurance company, you can invest money at a guaranteed account of 3% -4.3% (depending on the company and the investment period). In addition to the guaranteed option, companies offer a large range of investments in terms of the client's risk comfort level.
When can I start saving money in TFSA?
If you are a Canadian resident, you can open a TFSA as soon as you turn 18.
How much can you contribute to TFSA?
The annual limit in 2022 is $6,000 and this may change each year. But if you did not contribute to TFSA in previous years, or contributed less than the limit, then you can deposit more up to the amount of the limits for all the years that you were eligible to contribute money to TFSA, as the underused limit is carried over to the following years.
If I withdraw money from my TFSA, will my unused contribution limit increase? Yes, when you withdraw money, the unused limit is increased by the withdrawn amount. But be careful, this limit will only increase on January 1 next year.
For any additional questions, please contact 204-807-1705 or email [email protected]