When you visit your financial institution to open a Tax-Free Savings Account (TFSA), you will need to provide them with your social insurance number (SIN), date of birth, proof of Canadian residency, and you will need to know the type of TFSA you would like to open.
There are two basic types of TFSA accounts:
The main difference between the two account types centers around the investment options available, as outlined below.
A Regular TFSA account is typically opened with a financial institution and the eligible investments are typically restricted to the financial institution’s proprietary options. For example, when opening Regular TFSA accounts with a bank the investments available to you will typically be those issued and managed by that same financial institution – the bank’s Guaranteed Investment Certificates (GICs), mutual funds, and savings accounts.
Investments offered by other financial institutions and individual securities that trade in organized exchanges are not typically available to those that open a Regular TFSA account.
If you would like to invest your TFSA contributions in investments that are not available through a Regular TFSA Account, then your best option would be to open a Self-Directed TFSA account with an investment dealer/broker.
A Self-Directed TFSA account enables you to invest in any and all qualified investments including the following:
A Self-Directed TFSA account provides the greatest range of investment options and the greatest flexibility for individuals wishing to accumulate savings for long-term goals.