In their 2008 budget, the federal government introduced a new savings account to help individual Canadians accumulate a greater pool of savings – the Tax-Free Savings Account (TFSA). This new TFSA became available for Canadian residents,18 years of age and older, on January 1, 2019. In that first year between January 2019 and December 2020, over 4.8 million Canadians deposited more than $19 billion into their TFSA accounts.
By the end of 2023, more that 10.7 million Canadians held a TFSA, holding more than $120 billion. While that may seem like a very high number, it is still a drop in the bucket when you compared it to the over $1.0 trillion we’ve accumulated in our registered accounts (RRSPs, RRIFs, LIRAs, etc).
Some recent surveys have tried to discover why so few Canadians are taking advantage of the TFSA. And a couple of recent surveys by the Government of Canada and Bank of Montreal uncovered the following interesting facts about TFSAs:
In all of the surveys we have reviewed, those Canadians without a TFSA account have cited the following two main reasons for not opening a TFSA account.
Despite 48% of Canadians saying their TFSA savings is for retirement, its clear, from the investments held, the majority of Canadians still view the TFSA as a place to hold short-term savings, not a place to accumulate longer-term investments. It appears that Canadians have assigned specific purposes to the different types of accounts available to them. In effect, judging by their investment choices, Canadians seem to believe that:
Unfortunately, if this is true, then Canadians are missing out on one of the greatest advantages of a TFSA – the long-term accumulation of tax-free investment income. In this TFSA section we would like you to take this opportunity to learn more about TFSAs, from the types of TFSAs available to the rules that govern contributions, withdrawals, fees, etc. so that you can make a more informed decision in your effort to optimize your investment portfolio.