TFSA - Not your average bank account

Geoff Cook - CFP, CHAIP

{num} comments

One of the most common misconceptions is that a Tax Free Savings Account is just a checking account that you get at the bank. Although some Banks offer a superior savings rate for a TFSA, you could be missing out on taking advantage of a great wealth building tool.

The fact of the matter is that you can get a TFSA at many of the major Banks, Investment and Insurance company’s in Canada. You can also have multiple TFSA’s with as many different institutions as you want. You just can’t save or invest more than $5000.00 per year. (so far)

The main benefit of using a TFSA is that you don’t have to pay tax on any of your investment earnings.

I am going to use an example of a TFSA for a stock trading account. I am not suggesting you start trading stocks, this is a simple example.

eg: If you opened a Stock trading account at or at your bank, You could open a TFSA. When you are filling out your application, you simply click the TFSA box, or tell the person behind the desk, “Hey you, I want to trade stocks in a TFSA”

The benefit of using a TFSA to trade stock is that  when you sell your stock and make profit you don’t have to pay any tax on your profits.

eg – You buy a stock in ABC Inc. share at $100.00 and sell at $200.00. You have just made $100.00 profit. You will not pay any tax on the $100.00 that you have earned.

Some of the Investments you can hold in a TFSA are as follows;

  • High Interest Savings Account (like the checkin account at the bank)
  • Mutual Funds
  • Stocks
  • Bonds
  • GIC’s
  • Segregated Funds
  • Gold and presious metals

Now as you may know, the more money you make, the more tax you pay. Tax is a huge downer on the benefits of making money while investing.

Imagine, you take the risk of putting your money in the market. You make a profit and then have to give a part of that to the government!

As I mentioned at the beginning, many people use this account as a checking account, unaware that this is a great tool for investing in the market.

Most banks will only give you a 1.5% – 2.5% on your TFSA checking account. If you have time on your side, you could be missing out on a huge opportunity to make a lot more money in different investments.

When dealing in financial matters, you are urged to consult an advisor for legal, tax or investment advice. Every effort has been made to present information in a clear, exacting manner. However neither the publisher nor the authors can be held responsible for any losses incurred due to the actions of any individual as the result of this post or any errors or omissions contained herein.

Infinite Financial places mutual fund transactions through Banwell Financial Inc. and Life Insurance transactions through Bridgeforce. To learn more about these relationships - click here

Book an Appointment
blog comments powered by Disqus
Dont Forget These Two Simple Steps When Estate Planning

The pure purpose of Estate Planning is to make an efficient transfer of wealth. Efficiency of Estate Planning is measured in two parts:1) Tax: It is important to plan your estate in a way that will transfer wealth in a tax-efficient manner—set...

Read more
How to Save the Family Cottage

We have all heard the old saying, “Two things are guaranteed in life: 1. Death 2. Taxes.”We are at an interesting time right now where prices of assets over the last 50+ years have seen a tremendous growth spurt. I always find it interesting talk...

Read more
Infinite Newsletter

Subscribe to our email newsletter for useful tips and valuable resources!

You are subscribed.
Email already exist!