Which TFSA?

[DnA2010]

I know we are a little late to the party, but we want to move our savings into a TFSA- just wondering if anyone has done the research and can recommend a TFSA- it's overwhelming when you start looking

 

[ssmurphy28]

Does anyone in the family have access to one through a group plan at work? I contribute to my TFSA right off of my pay in the group plan and seem to get much higher returns than you would through a bank (although I am not making much right now due to market conditions). That would be something to look into...even if you don't want to regularly contribute off of your pay (or only contribute a low amount), if you just open it up, you should be able to do a lump sum contribution.

 

[sk8jdgca]

You need to decide what you are going to save for. Is it long term or short term? A TSFA is a TSFA no matter where you get it. Just make sure there are no fees for holding the account. What you get to invest in will vary at different financial service locations. If you are going short term, you can really only invest in savings, so look at Canadian Tire, or another online company.
If you are looking at long term, you will want to sit down with a qualified salesperson. Ask about MER ( lower is better) look for long term returns, don't chase returns. Ask about load fees.you want no load. The salesperson should talk about your needs, your goals and dreams. If they start talking about what great returns they are going to get you, walk out. They should be able to find you an investment that fits into your financial goals. Remember that funds and stocks are kind of like the price of gas, they go up and down but overtime they generally go up. If you set up a automatic purchase plan, you can take advantage of the downs in the markets and should come out ahead over time. Of course when the markets are down like right now, it probably is a good time to put more in.

 

[bcwife76]

Currently we have our TFSA's with Tangerine (formerly ING Direct) - no fees, all transfers to and from Tangerine and external accounts are done online. We have no complaints thus far

 

[xlxo]

Thoughts...

• Both TFSA and RRSP allow your savings to grow tax free
• RRSP offer tax savings by reducing your income for the year of contribution, TFSA's do not.
• TFSA's can be taken out before retirement, but there is a limit to how much you can contribute each year.
• TFSA and RRSP should be contributed ASAP. If you retire with savings MIA.... RIP.
  http://www.cbc.ca/player/play/2330337738
• https://en.wikipedia.org/wiki/Tax-Free_Savings_Account

 

[Gina-Gina-Bo-Bina]

Thoughts...

• Both TFSA and RRSP allow your savings to grow tax free

Not correct. Investments within an RRSP grow tax deferred, not tax free. Investors DO pay tax on the growth/interest/dividends earned on an RRSP account, its just deferred until the funds are withdrawn.

OP, get yourself a good financial advisor. You will get much, MUCH better advice from a licensed professional versus the Disboards. A licensed advisor will be able to give you the "big picture"....they'll be able to determine your personal risk tolerance and help decide the best type of investment to accomplish your individual goals, they'll give you advice and insight on current market trends, and they will be able to give you excellent tax advice.

 

[sk8jdgca]

Not correct. Investments within an RRSP grow tax deferred, not tax free. Investors DO pay tax on the growth/interest/dividends earned on an RRSP account, its just deferred until the funds are withdrawn.

OP, get yourself a good financial advisor. You will get much, MUCH better advice from a licensed professional versus the Disboards. A licensed advisor will be able to give you the "big picture"....they'll be able to determine your personal risk tolerance and help decide the best type of investment to accomplish your individual goals, they'll give you advice and insight on current market trends, and they will be able to give you excellent tax advice.

Great points Gina!
To your tax deferred point. If your RSP is totally capital gains, you actually pay more tax on the growth than you would if it was just invested outside of a RSP.
Capital gains are halved prior to getting added to your taxable income while the growth you withdraw from your RSP are 100%added to your taxable income in the year you cash in. Gains in a TFSA are 0% added to your income, so that is the biggest bang for your buck tax wise. However you needed to have the right risk profile in order to purchase equites.

Using a TSFA as a way to just save ( cash or GIC's) is the least tax effient use of a TFSA. Really a high interest saving account is a better use for short term savings/ emergency fund and keep your TFSA limit room available for long term investments.

Yes OP go and takes to a licensed professional. Just keep in mind what I said before about how to pick an advisor.

 

[xlxo]

Not correct. Investments within an RRSP grow tax deferred, not tax free. Investors DO pay tax on the growth/interest/dividends earned on an RRSP account, its just deferred until the funds are withdrawn.

Thanks for the clarification..... since I'm not a retiree yet.... I forgot about that point.

Most people retire without earning an income. As a result... RRSP's are tax at a lower rate than during income earning years.

 

[DnA2010]

Thank you all for the responses- I should have been clearer- we have good RRSPs, and investments and that, but haven't done anything as far as TFSA. Currently our savings that we use for things like unexpected car work, travel, home renos etc are just in our checking account and we were figuring that it doesn't make sense to be hold that kind of money in a checking account, so something like a TFSA that is accessible might make more sense. I will look at a higher interest savings account of the TFSA

 

[papertraveller]

As Gina says, get a good advisor. You can't use the TFSA to pull money out and then replace, without hassle. That's because the contribution limits are capped and controlled. Please make sure you fully understand the nature of the product, and then understand the scope of investments that can be held within the product. Many people have been unwittingly hit by CRA when they withdrew, and then didn't understand the rules for putting their funds back in.

 

[LdnCpl]

As a previous poster stated, I too have the funds withdrawn weekly off my paycheque and direct deposited into my TFSA. Our work deals with SunLife Financial. They also will allow anyone to set up an account and create basically the same this as I have where you can deposit weekly, biweekly or whatever. They also have different funds to invest into short term or long term depending on your goals. Seeing as you are posting here I assume you would like to use it as a vacation vehicle which is basically what I use it for. I too have RRSP's but like the TFSA for vaca savings because it is basically coming off of your take home pay therefore no future tax ramifications or the same as if you took that $100 and transferred it into a savings account or stuffed it under your pillow whichever way of savings you prefer.

 

[DnA2010]

So doing some reading, and
The annual TFSA dollar limit for the years 2009, 2010, 2011 and 2012 was $5,000.
The annual TFSA dollar limit for the years 2013 and 2014 was $5,500.
The annual TFSA dollar limit for 2015 is $10,000.-

so DH and each have a lot of room, if we don't have TFSA's, do we not? The contributions are cumulative right, so do I not have all the room from 2009- present?

@LdnCpl - that's what I was thinking really- rather than that cash sitting under my pillow/in my checking account

 

[bcwife76]

@DnA2010 yes those totals are cumulative so you have all that room to invest in your TFSA.