What is Tax Free Savings Account?
Saving is not just a good habit, it is fundamental to our survival. We all know the story of the "Grasshopper and the Ant". The ant collected food during summer and had a comfortable winter. Whereas, the grasshopper that lived carelessly ended up struggling in the winter.
Saving is necessary but more important is knowing the right places to start your saving. Tax-Free Savings Account or TFSA is one of the best investment option in Canada. As the name implies, tax-free growth of your investment is one of the many benefits that you get while investing in TFSA.
Why You Need to Invest in TFSA?
You need to protect your loved ones every step of the way. Life Insurance provides financial security for your family, your loved ones and your business. It’s also important to note that life insurance can be very affordable—no matter how much money you make. Not having to pay taxes on the life insurance death benefit, your beneficiaries are free to use the money as they wish. It is important to invest in life insurance to make sure that your dear one’s don’t suffer after you are gone. It is also used to cover your mortgage and your personal loans, such as your car loan.
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Advantages of TFSA
- A large number of investment options.
- Tax-free growth. The growth of your investments or even the withdrawal of the same is not taxed.
- A maximum cap of $6,000 per year. Every year, you can invest up to $6,000 in TFSA and get all the fits of the plan.
- Withdrawal of money from TFSA replenishes the contribution room the next year.
- Unused contribution room is carried forward to the next year. If you don't contribute the cap of $6,000 per year, you can invest the difference amount the nest year and still get all the benefits of TFSA.
- Investing in TFSA does not exclude you from the government benefits like OAS - Old Age Security, GIS, GST credit, etc.
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