Tax-Free Savings Account (TFSA)
What is a TFSA?
A Tax-Free Savings Account or TFSA can be used to help people achieve their short and long-term goals whether it be a new home, a future family vacation or to accumulate money for an emergency fund or supplement retirement income. A TFSA is a plan that can hold eligible investments within it, such as Guaranteed Interest Accounts (GIAs) or Segregated Funds.
A TFSA is a great tool that could be used for an emergency fund for unexpected life costs or saving for other short-term needs. Depending on your goals, it could also be an option for a retirement savings plan. Within a TFSA, income and growth in the account accumulate tax-free. The funds are easily accessible in the event of an emergency, provided that deposits are made in eligible investments and according to regulatory restrictions.
Depending on your personal situation and your financial goals, a TFSA could be a wise choice for you as it’s more flexible than some other savings options.
Here are four reasons why you should consider a TFSA:
- Contribution room is not based on your income
- You may contribute up to $6,000 per year1
- Unused contribution room is carried forward every year
- If you choose to take money out of the TFSA, you can re-contribute it the following year, in addition to the annual maximum
1 Annual limit set by Canada Revenue Agency each year.