What Can You Invest In With A TFSA?
We have all been advised to save and invest by all, professionals and family every time. But one with limited knowledge and no clue where to start from or which is the best investment, what do they do? Canadian government with your best financial safety in mind introduced this great plan back in 2009. TFSA(Tax-Free Savings Account) is an account where you can save your excess income simply in cash, or in the form of any other investment.
TFSA(Tax Free Savings Account) can easily be stated as one of the simplest ways to save money in Canada.
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How Does TFSA Work?
–Any Canadian above the age of 18 can open an TFSA account to deposit and save their excess money.
–There is a cap on the amount that can be deposited in this account which is prone to change every year.
–This cap (say $5,000) if not filled this year, can be carried forward to extent your next year’s cap (say $5,200 + previous years un-utilized capacity)
–Any amount crossing the cap is prone to a penalty.
–This amount accumulated in the account can be used to make multiple investments as listed as follows:
- Mutual Funds
- Listed Securities
- Bonds or Shares of Small Businesses
- Guaranteed Investment Certificates
- Cash
–All earnings on such investments are not prone to any tax, and can be taken home fully.
–In case you plan to withdraw any amount in a particular year, you stand the chance to deposit it back the next year above the cap limit.
–In Simple Words:
Your Cap this year= Current year declared cap+ previous year’s unutilized capacity + previous year’s withdrawal
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