TFSAs are becoming more and more popular for Canadians, being used as a way to park cash. Here are some top facts about the tax-free savings account to help you better understand why you should consider one.
TFSA Contributions Exceed RRSPs
As around 60% of Canadians have an RRSP, they have long been the go-to investment option for retirement. However, TFSAs have been on the rise and, surprisingly, have more contributions than RRSPs. TFSA contributions exceeded RRSP contributions since 2013.
While TFSAs are still quite new, only being released in 2009, they are quickly becoming popular compared to RRSPs, which date back to 1957.
Canadians Use TFSAs as Simple Savings Accounts
A poll from Ipsos found that 40% of Canadians use TFSAs as just savings accounts. 42% have a significant amount of cash sitting in their accounts.
While not a bad thing, specialists say that you may not be getting the most out of your account. By only parking cash in your TFSA, you miss out on tax-free compounding. When you invest the money that is in your TFSA, you benefit from compounding, which helps your earnings generate even more earnings.
TFSA Funds May Be Withdrawn
The most important of all is the fact that you can withdraw funds from your TFSA, any time, tax-free. Additionally, they don’t impact your income-tested benefits and credits. This includes the Guaranteed Income Supplement and Old Age Security.
Consider Nest Capital As Your Investment Solution
The time to invest is now. Consider a Mortgage Investment Corporation as a way to diversify your investment portfolio. Our team here at Nest Capital will help you through the entire process. Get in touch with our team by phone or fill out our contact form.