the truth about TFSAs (and why you should open an account today)
November 12, 2019
Only a decade old, the TFSA is an extremely helpful savings product, but one that comes with many questions. As a financial institution, giving you the low-down, inside information, the word, the whole story (okay you get it) on TFSAs is super important to us. Get all the deets below.
Having a TFSA = no tax
With a TFSA, you don’t pay taxes on earned interest, so your money grows more quickly — and that’s not even the best part. You’re not penalized if you decide to take money out and at Sunova you get two free withdrawals per month.
There is a limit
Earning money tax-free is all fine and dandy but it’s important to understand that there is a limit to this savings product. The government decides the contribution amount each year. For 2019, it’s $6,000.
If you don’t use all your contribution room in a given year, the government lets you carry that over to the following year… without limit. Awesome!
Your contribution room could be more than you think
Didn’t we just say $6,000 is the amount for 2019? We did, BUT there is more to this. Your contribution limit starts the year you turn (or turned) 18, which is when you can open up a TFSA. If you were eligible for a TFSA since the government introduced the account in 2009, but didn’t open an account until yesterday, boy do we have good news for you.
Since the contribution room carries over, you would be able to contribute a whopping $63,500. You could earn some sweet tax-free interest off that. Now THAT is awesome.
Lock your TFSA in a term for more interest
If you thought a TFSA couldn’t get any better, think again. Consider locking your TFSA into a term to earn even more interest. If you have a savings goal (car, vacation, that limited edition comic book…) or just like seeing your money grow, this option could be perfect for you. Just remember, you won’t be able to access your locked funds until the term is over.
Example: $6,000 locked in for 24 months @ 2.3% = $138 tax-free interest
The TFSA possibilities are endless
Earning interest tax-free and locking your TFSA into a term isn’t the only thing you can do with this super versatile product. You can hold other investments in a TFSA including bonds, stocks, and mutual funds. It doesn’t have to just be cash, which makes the TFSA desirable to many.
Tax-free still having you go ‘huh’?
Or maybe you’re ready to open that account? Well, that’s awesome, because we are here for you. Contact your local Sunova branch today to get the process started. We can’t wait to see you soon.
If you want to learn more about saving, then take the Sunova savings quiz. You’ll learn your Sunova savings type and even pick up a few tips along the way. Plus, if you take it before February 15, 2020, you get entered to win $500!