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Looking at adding to your portfolio of investments? Tax Free Savings Account (TFSA’s) could be an interesting option for you. TFSA’s allow you to contribute into your account, and have the money within the account grow tax free. Even when you decide to withdraw your money, it is still tax sheltered and therefore unlike RRSP’s, it is withdrawable tax free. On the same note, unlike RRSP’s, TFSA’s are not deductible for income tax purposes.

Different ways to invest in your TFSA

You can invest with banks in their high interest savings accounts, or even a GIC type of TFSA, however these banking products generate a low rate of return compared to non-banking products. This is the right product for someone who is looking for little growth, with stability being the main objective.

There are TFSA’s in which you can invest with insurance companies, within a segregated fund which open up your options, and allows you to take control of your investment. You may decide to go conservative or more aggressive in order to maximize your return. Remember, the purpose of investing is to grow your assets, and growth through segregated funds allows you to choose which type of investments you would like to choose within your TFSA fund. You can choose different kinds of equities, bonds, stocks, etc.

Mutual Funds are another well known type of investment. They are similar to segregated funds, without the added perks.


Now, the one thing to keep in mind, is that the government puts a cap on how much you can invest within your TFSA on a yearly basis. As time goes on, the amount of your yearly maximum contribution will increase along with inflation. As of the 2016 calendar year, maximum yearly contributions are $5500.


Canadian residents are allowed to take part in this program. You must have a social insurance number and be the age of majority.

Things to Know:

  • Any amounts that you withdraw from your TFSA account can be re-contributed into your account in the proceeding years.
  • If you’ve maxed out your own TFSA account, not a problem! You can then contribute into your spouses account as well. Keep in mind that you must respect the annual contributions limits.
  • Any unused contribution space gets carried over for future years.

Who should contribute into a TFSA?

  • If you have already maxed out your RRSP contributions, then TFSA’s are a good way to build your assets and compliment your investment strategy.
  • If you don’t want to lock in your money until retirement and want the flexibility of withdrawing your money tax free.
  • You may have short-medium term goals, such as purchasing a car or boat, renovating your house or taking a nice vacation.
  • If you want to save for retirement and invest in TFSA’s within segregated funds, where the rate of return on your funds is advantageous, you may decide that growing your money for retirement tax free might be a good strategy.

Give Team Levine a call today! Our friendly representatives will be glad to give you the investment advice you’re searching for.

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