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Tax Free Savings Account (TFSA)

The Tax-Free Savings Account (TFSA) is the most exciting innovation in personal savings since the creation of the Registered Retirement Savings Plan (RRSP) by the government of Canada.

The TFSA is a unique tax-free savings program (non-RRSP) now offered by Investia to help you:

  • Accumulate more savings to pursue personal projects, TAX FREE
  • Place income generated by invested sums (existing investments, investment income, inheritances, donations, etc.) in a tax shelter account
  • Maximize your savings with retirement in mind
Advantages of the TFSA

If you’re a Canadian resident age 18 or older, you can benefit from a savings account that offers the following advantages:

  • Simple and accessible You can contribute up to $5,000 annually in a tax-free account, regardless of your income.
  • Tax free Any earnings generated (interest, capital gains or dividends) in the TFSA, as well as sums withdrawn, are not taxable.
  • Cumulative contribution room Unused annual contribution room accumulates indefinitely.
  • Ease of withdrawals You can withdraw any amount at any time without penalty. *There is no restriction as to the use of withdrawals.
  • Ideal complement to an RRSP The TFSA investment instrument complements an RRSP as an efficient way to save and put more money toward your retirement.
  • No affect on income-based government benefits Neither TFSA contributions nor its earnings affect eligibility for the Guaranteed Income Supplement, Old Age Security, the Canada Child Tax Benefit or other government benefits based on income.
  • Practical income-splitting tool A couple can contribute to two TFSAs even if one of them has no income.
  • Collateral assignment It’s possible to assign the assets of a TFSA as collateral for a loan.

Non-Registered Investments

A non-registered plan (commonly referred to as ‘open’ or ‘investment accounts’) enables investors to invest an unlimited amount of money in funds with exposure throughout the world. Non Registered plans are not tax sheltered, the gains and losses declared for income tax purposes.

Benefits
  • No contribution or withdrawal limits
  • No account fees (other than applicable sales charges)
  • Potentially higher rate of return than on your bank account, and you have access to our various investment vehicles.
  • Collateral value

To open an account, a minimum investment of $500 or a monthly Pre-Authorized Chequing Plan (PAC) of $30 is required. Subsequent lump-sum investments can be as little as $100.

Who should consider a non-registered plan
  • Investors who have reached their registered retirement savings plan (RRSP) contribution limits and would like to capitalize on their investments to carry out their plans, while retaining a certain amount of control over their investments.
  • Persons wishing to obtain a source of income through a systematic withdrawal program.
  • Investors wishing to accumulate amounts in the short term (financial cushion, vacation, etc.).

Investment Loans

Many Canadians invest regularly to save for retirement, but most investors could do better by borrowing to invest. The concept of leveraging or borrowing to invest has been used forever by the rich to make themselves richer. But anyone can benefit – if they know how.

The Advantage

Most Canadians spend thousands a year on loan payments to purchase consumer items and vehicles that decrease their financial wealth. Properly understood and implemented responsibly, borrowing can also be used to purchase investments to increase wealth. This concept, called leveraging, has been used by the rich forever to make themselves richer.

Government Clarifies that Interest Expense is Tax Deductible

It is important to understand that whenever you borrow to invest outside of RRSPs, the interest expense is tax deductible. In a recent interpretation bulletin, the government has clarified that when an investor borrows to invest in mutual funds, the interest expense is generally tax deductible.

The Challange

The challenge is that leveraging is a strategy that magnifies both gains and losses. It is a tool that can help or hurt investors, depending on how it is used. When both are understood and implemented properly, leveraging is one of the most powerful wealth-creation strategies that exist.

Your Investor Profile

This investor profile was designed to guide you in the establishment of your investment strategy. Although we have taken steps to provide you with the most accurate evaluation possible, you are responsible for choosing your own investment strategy. timetoinvest.ca and affiliates are not liable for any losses resulting from the use of this calculator.

Alliance Financial Group
Investia Financial Services Inc.