Hi, I’m Alex McVean for McVean Wealth.
One of the most common questions for people starting to invest, is “what account should I open?” Today we’re going to look at one of the best options for Canadians, the Tax-Free Savings Account or TFSA.
Despite the name, the tax free savings account is nothing like your traditional savings account. You can think of it more as a government incentivized program to help Canadians save their money. Your TFSA can hold a variety of investment holdings including stocks, bonds, mutual funds, ETFS, or GIC’s.
There are 2 main benefits to a TFSA over a regular investment account.
The first is that any gains or income earned within your TFSA, will not be taxed, ever.
The second, is that any money withdrawn from the TFSA is exempt from being taxed as income.
Since you are not taxed on the investments within the TFSA, the TFSA should hold your investments with the highest opportunity for gain or income.
While each individual will have their own unique risk profile, the TFSA is best used as your growth-oriented account.
For McVean Wealth, I’m Alex McVean.