Tax-Free Savings Accounts (TFSAs) take a unique approach to building wealth and have since emerged as the most popular type of retirement savings account, despite being relatively new. TFSAs pose benefits where other programs fall short. Other programs require decades worth of consistent deposits, where withdrawals must be made sparingly. TFSAs have many benefits, and here are just a few reasons why this program may be right for you.
TFSAs Level The Playing Field
In most areas of life, the highest earners have the upper hand. Some may even argue that this is an unfair advantage. But as far as TFSAs are concerned, all people are created equal.
The contribution room, or limit, is the same regardless of social class. Your maximum contribution increases every year from age 18 onward. As of 2022, the total contribution a person who was 18 or over in 2009 (the year the program was introduced) could make is $81,500. Right now, the most a person can add in a year is $6,000, but that figure will increase in the coming years.
While you have to make contributions with after-tax income, that makes its next benefit possible.
You Aren’t Taxed At Any Part Of The Process
TFSAs offer tax-free growth and withdrawals. This is important considering the role taxes play in other contexts, and this may be the most compelling benefit out of all TFSA features.
You can make contributions in the form of investments. Outside of TFSAs, you’re taxed on the capital gains you make on those investments. In the world of TFSAs, capital gains taxes aren’t there to hinder your account growth. This is especially appealing if you trade stocks short-term.
You can withdraw more than what you put in, without any taxes whatsoever. This not only makes it a fast process, but it’s one that makes TFSAs advantageous in the short and long term. And you never lose your contribution room. What you withdraw gets added back to your contribution room the following year.
TFSAs Benefit Those Around You
TFSAs serve to improve the financial stability of those you care about the most. If you’re married, you can include your spouse in your TFSA, which is something you can’t do in other retirement accounts. TFSAs are a path to financial freedom that you don’t have to walk alone.
And TFSAs have an element of immortality because after you pass away, your account can be transferred to your loved ones without taxes interfering with the process.
Get Started On Your Tax-Free Future
At Fidusure, we want you to capitalize on today and tomorrow. And with TFSAs, you’ll be able to do just that. Call us today at (647) 567-4702 to learn more.