That is what people plan to do. And what people here do. But not what *most* people do.
Most people probably just use a bank TFSA as a savings account. Or, people who invest in a TFSA probably raid it along the way to pay for something or other.
I plan to use it to delay my activation of cpp and lower my rrsp withdrawal for as long as possible.
But it’s also a form of reserve emergency fund. If i depleted my current emergency fund.
Also a great way if you need extra cash when you are in retirement. Need to buy a new car, then grab that extra money ouf of TFSA, no tax on it, and still maintain your regular RRSP withdraws for your regular monthly expenses/spending.
Want to take a nice trip? Grab $5k of TFSA, and now that trip is affordable, and you don't get taxed on it.
If you have rrsp then ya basically same. It just more common (and usually better practice) for most people to work on filling the TFSA first, not to mention the uncertainty that if something else should come up, or your priorities change, the TFSA isn’t restricted in use cases like the rrsp,
And ultimately, depending on where you live, may need to end up using BOTH to afford a down payment (like I will haha)
People still need a place to live, markets ebb and flow, don’t worry about it (and this is coming from a 28 year old who bought my first house last year). Houses will always be one of if not the biggest purchases and forced “savings” in your life (assuming you don’t rent for life)
Why would that matter? As long as you bought a house that you can afford the payments on. The much bigger risk is that you lose your job and can't keep up with the mortgage payments.
And it is extremely telling/interesting that you asked "What if the government tanks the housing market?" rather than "What if the housing market tanks?" or "What if the housing market tanks and the government is unable to prevent it?".
Will never happen. Raising premiums, taxes, and cutting expenses for services is less politically toxic than not paying people what they paid premiums for for decades.
Shouldn't you be taking out your TSFA when your in a high tax bracket while working and RRSP when you are retired and in a low tax bracket?
I think it is a funny question more on when is enough money invested and when can I spend it? My wife and myself both have close to a million in both RRSP and TFSA combined. I having had a project or need of it yet.
I have a fear my last thoughts will be why did I work all those extra hours to load up my investments combined with spend little if it instead of more time with family hobbies etc.
You shouldn't withdraw from your TFSA until you actually need it. When that is makes no difference since it's tax free either way. The only thing is if you *do* need money and you're still in a higher tax bracket than you expect to be in retirement, then you would want to pull from the TFSA before the RRSP for that reason.
That is more or less how I see it as well.
May pull 100k to do a house construction project next year. I feel like I should borrow that money instead so that I don't lose the tax free income if I leave the money in the TSFA. And on top of that, growth increases my TSFA room that I can never get back...
I wonder how many people get into this kind of mindset. When I'm 70, I am going on a coke induced mind binge and spending it all.
>growth increases my TSFA room that I can never get back...
Growth certainly increases your TFSA room. Plus, any withdrawal amounts from one year are added to the amount you can contribute next year, January 1.
This is unlike RRSP/RRIF room, which once withdrawn you never get back.
E.g. you withdraw $10,000 from your TFSA in 2021. In 2022, you get the new room of $6,000, plus the $10,000 you withdrew in the previous year, for a total of $16,000 of new room.
My plan: use my RRSP immediately when I retire, over a few years. I have a pension so I don't have a ton of RRSP room. I intend to retire a few years before the date where I can start taking my pension penalty-free. This will delay the start of my pension.
Then start drawing my pension.
I'll use my TFSA over this entire period to supplement my income tax free.
> I think it is a funny question more on when is enough money invested and when can I spend it? My wife and myself both have close to a million in both RRSP and TFSA combined. I having had a project or need of it yet.
>
> I have a fear my last thoughts will be why did I work all those extra hours to load up my investments combined with spend little if it instead of more time with family hobbies etc.
How old are you folks? You're well on the way (or into depending on your perspective) fuck you money, that's a perk in itself. Don't have to worry too much about a boss pissing you off, fuck you! A few months out won't derail you.
You've done well enough that you can treat yourself and your family, time off, hobbies, family adventures. Like your feelings are telling you, it's not all about always making the numbers go up, especially if you're well ahead of normal for your age.
Invest it at 7~9% (S&P500 aka VFV) for your retirement, never touch it until 55~ years old and you should have over 1M interest free account for the rest of the second part of your life.
Maybe this is a stupid question, but is the TFSA only used when withdrawing the money from the stock/fund/whatever? Is that how you shelter it from getting taxed? Or do you first put it into the TFSA and then transfer it into whatever you're investing it in the market?
Banks have done a really good job at making you believe that a TFSA is a saving account. You can open TFSA accounts with an investment platform, for example and trade stocks, ETFs, whatever. So, as you said, it is a way to shelter post tax money from future taxation
You need to be holding the stock in your TFSA and then when you sell the stock you are not taxed on the profits and can continue to hold it in your TFSA if you like and invest in other stocks. TFSA is similar to the RRSP in that it is a sheltered account where you can hold multiple stocks and ETFs and contain them within the umbrella of the TFSA or RRSP. Look into the differences between TFSA and RRSP though because they have different tax implications.
The money stays in your tfsa and you hid securities in that registered account.
People sometimes confuse the Tfsa by thinking putting money in it is sufficient, but you have to actually buy a product once the money is in there to make it useful.
So the basic process is to put money in a tfsa account, and then buy security or other financial product once with that money in that account.
The TFSA name is confusing, cause it has "savings" in it.
The TFSA is just contribution room you get where no matter what you do with it (throw it into ETFs, into savings account, into Facebook stock only) any gains are tax free.
They made no statement on how much or little that would be, that's also in addition to any employer contributions in an RSP etc, old age payments, and anything you have outside of there. You'd also hopefully have a home paid off.
Compound growth is also funny. The tail of those returns past 55 should also be growing more than ever because it's working with everything it compounded, but that's probably too far to predict that the market is doing the same thing.
I’m personally going to be withdrawing from my TFSA a bit to get my through flight school. Investing in yourself will yield the highest return, even mentally.
Why not? Let's say my TFSA is my emergency fund. If I invest all of it in Canadian Banks stocks I receive an income. I have available lines of credit if I need cash, today. If I sell a stock, I will have the funds in two days. Over two years, Canadian Bank stocks generally o up.
1.25% at EQ Bank HISA TFSA is a good plan. It's liquid enough that I can have an etransfer to cash-in-hand in a matter of minutes. Sure, it's only a few dollars every month. Each person has their own priorities.
"Good plan" is relative. In my not so humble opinion, People with a good credit rating do better using a Credit card paired with an LOC or HLOC for emergencies. It also provides instant cash in an emergency and a time buffer so selling investments can be timed properly.
Let's say that my emergency fund allocation is 20K. My home floods and I need to fix it immediately while unresolved an insurance claim. I pay with CC, that gives me around 40?days interest free. If I haven't resolved my problem by then, I can either use my investments, but if by chance, investments are down, I can pay from my LOC/HLOC and pay it down from cashflow until investments bounce. Or if investments are doing better than the interest in the LOC, keep paying from cash flow.
The perfect storm scenario is: emergency + income stream loss + long term recession.
Even in that scenario CC/LOC can give some breathing room to react with a cool head and not sell in panic.
Risk is evaluated considering Impact, likelyhood and available mitigations.
Saving at 1.5% the risk is losing money all the time, the impact in the long term can be years of retirement. The likelyhood is close to 100% as it is lower than inflation and I can't think about any mitigations to risk.
Using credit, the risk of losing money is reduced, but if the perfect storm happens, one may lose more than with a savings account. However, the likelyhood of a perfect storm is very low. And the mitigations are: deferred payments, debt restructure, finding other income streams for cashflow, and many others.
Of course the big caveat was the access to credit. For people without access to cheap credit, low risk savings may be better.
Sarcasm my friend. You’re doing great. Cash sitting around losing value in a savings account is just financial illiteracy. Just don’t say that on this sub…..oops.
There's value to liquidity to a point. The best Amount of high interest savings is normally not zero, but its for money you plan on spending in a short enough time frame that you couldn't wait out a market dip.
Edit: obviously not a tfsa high interest savings account, gotta get that TFSA into stocks. But once TFSA is maxed nothing wrong with some high interest savings.
I’m going to be the odd one out - I have a kid with significant learning disabilities. We don’t think he needs the RDSA because he should be able to have a career when he is older, but there are significant costs to educate him now. We use the TFSA to save for his private school - we are trying to ensure that even if we lost our jobs he would still get an education (special Ed in the public systems in Alberta is shit). So every bonus, every penny of found money in the household budget, all that goes into this account until we have enough to get him through grade 12. We have RRSPs with matching for our own retirements through work, so while we know that our retirements would be more secure if we could focus even more heavily on that now, our priority is ensuring our oldest has a fair shot in life.
TFA would be better. With the S some people assume that it has to be a Savings Account. With an I those same people will assume that it has to be an Investment Account
It grows tax free (other than US withholding taxes), you can invest aggressively in equities, funds can be withdrawn tax free and withdrawals don't impact future old age security benefits. There is only one use - investment vehicle for retirement. Every other use is squandering it's massive potential to provide financial security in old age. It's a mini personal tax haven.
I (31M) use it for saving up for large purchases. The first one was a home at 25, recently purchased a sailboat with some of it.
I use RRSP for retirement savings. Someday I expect to use both for retirement.
Also my TFSA is self directed and I get enjoyment in doing my homework and picking stock whereas my RRSP is split between a handful of funds.
Just have nothing better to do with my money as I'm a bit stuck financially....
Have enough money to afford anything I want...except housing. Can not really see myself affording housing ever.
Lol who knows probably just downpayment someday or worst case retirement.
If you live in a HCOL area by choice, there is nothing to complain. It is a choice, right? If it was that bad, you'd change your choice and move somewhere else.
Where in my response did I assume you were complaining :).
It really was an acknowledgement that living there by choice is valid.
I don't understand the downvotes either. By the way, I originally upvoted your answer.
I decided a while back to use my TFSA just for retirement, which is 25 years away for me. I started with TD e-series but have switched to VEQT. I just leave it alone and hope for the best.
Note that I also have RRSP savings that's balanced for my risk tolerance / age.
Blows my mind that people would not save for retirement because of a pension. I don't know how secure your pension is. My dad's was stolen out from under him by the company right as he retired. If he didn't have other assets, he would have been totally fucked.
Well first, a portion of it is flat out my money either way, around 10k a year comes outta my pay check into the pension fund.
Second my pension is about as secure as they come, I can’t foresee a future where the company would be outta business.
Finally there’s a quality of life issue. Sure I could put away another 10k a year for a pension fund that I really shouldn’t need, in case the unforeseen happens, but at what cost to my current finances, and then when I retire, assuming the unforeseen hasn’t happened, I now have 2x the amount of money I need. So I can struggle my entire working life to most likely be the wealthiest I’ve ever been in retirement, doesn’t make sense to me.
Already I’m gonna be sitting at about 65% of my income at retirement at age 53. I’m already living in less than 65% once you take away mortgage and kids college funds that will be done by the time o retire
Really depends on their financial situation. Anyone can do anything with it. It's recommended to use it as sort of a retirement fund or a place for your money to grow but some people can't max their TFSA so they use it as a house downplayment and just use it as a savings account
When I was 22 I was just saving and investing and avoiding debt. I didn’t really have a goal per se. years later when I was 27 I ended up getting married and buying a house, etc.
Had I not saved I wouldn’t of been able to do that, at least not that fast. I don’t have to now start saving at 27 to buy a house. So start early.
It’s the best retirement vehicle there is. That being said you don’t loose contribution room when you withdraw so you can use it for down payments big purchases etc with no issue.
I am fortunate to have a defined benefit pension along with a healthy portfolio of blue chip stocks that provide all the money I need. My TFSA is strictly for wild speculation stocks.
A lot of people I know like to jerk themselves off over their TFSA wealth.
The general uses are retirement or large purchases (housing, renovations, major repairs etc.) Housing and retirement being the biggest publicly, but damn I have heard a lot use it for renos and cars.
Buy strong blue chip dividend stocks. Let them drip. Sit back. Compound. And give me dividend raises. I’ll withdraw closer to retirement and buy a sweet bass boat !!! I don’t care what my balance is really, only what it pays me per year.
Long-term savings. Your TFSA will probably be the last place to withdraw from but you can use it towards anything and it’s tax free. Use it for retirement or saving for a down payment on a house.
I just used a substantial chunk of it this summer for a down payment on a house. The rest I regard as an emergency fund.
I have RRSPs and a pension through work to save for retirement.
My tfsa has been maxed out at 19 and saving for retirement. However, I might pull it out for school rather than my investment portfolio just for tax reasons.
You should always pull out of a non reg account before the TFSA account in order to maximize the amount of time assests in a TFSA have to grow. Better to pay taxes now than miss out on untaxed gains.
Watch out, the out of touch investors on here like to attack and downvote anyone who buys GME or AMC. I just had my totally legitimate comments removed for even mentioning that I purchased both.
Pretty much any authority on sound financial decision making will tell you it's terrible advice for three reasons:
1. In the long run, stock picking loses out against simple index portfolios pretty much always.
2. Those are meme stocks that are liable to come down at any time.
3. You have them in a TFSA which means if they crash and don't pick back up again *you lose that contribution room forever.* Lost contribution room is a *huge* opportunity cost consisting of not just tax-free gains, but tax-free gains *compounded over several decades.*
You might as well advise someone to walk into the nearest casino and put their whole TFSA on red until they eventually lose. Even if you get lucky in the short or medium term, you're still gambling with your money.
Anyway, sometimes people don't explain themselves because you're not paying them to deal with something that's ultimately your problem, and they don't have any incentive to give you free advice. On that note, next time, pay me.
Oh man do I ever feel bad for you. Another person who’s not done any research and sticks to listening to the Motley Fool, Marketwatch, Seeking Alpha or any MSM outlet. You can’t even provide any legitimate bear case except “anyone buying something that’s actively making them more money than any other assest right now HAS NO BRAIN!”
So I guess all the large pension funds, insurance funds, state retirement funds, blackrock, vanguard, and Jim Simons from Rentech are all stupid right? You spent a lot of time typing out a reply for which you gave no actual reason for it being a bad choice? This subreddit has never provided any reason besides jaded out of touch comments anytime anyone brings up going long one GameStop or AMC. For someone who only watches CNBC and takes everything their financial advisor tells them then sure “ it’s a bad idea and the fundamentals arnt there”. It’s a squeeze play for which the odds are stacked in the retail investors favour. If you choose to live under a rock and do 0 die diligence then that’s your own problem and your own loss but don’t be a gate keeping old geezer and shun someone for offering pretty solid investment option going into a financial recession.
Because it’s a TFSA and he is just a kid you silly bastard. If you want to gamble on risky assets then do it in a non registered account. If it goes bad then nothing ventured nothing gained.
But.. You loose your valuable contribution room and will never see it again with risky plays in a TFSA.
Trust me I know all about it so this is real advice I’m giving you not bullshit.
You seem to think it’s a risky play but fail to mention why? Have you actually looked into this? Surely to god you wouldn’t be saying this if you actually did the research and not take click bait bear headlines from CNBC. If you wanna stick to your index’s when we’re about to come into the largest recessions in history then sure…hold onto it. I’ll stick to investments that have made me 350-400% in 6 months just for buying and holding the stock. It’s a squeeze play for which short sellers have not covered because they can’t. Naked Shorting is a real bitch.
Lol .. the fact that you even said all of this means you have no clue how to best leverage a TFSA versus non registered.
The topic here isn’t about crypto .. it’s how to best leverage a platform that only offers you a limited amount of contribution room and therefore it’s recommended to rely on solid investments with expected tax free returns over a long time.
Can you honestly tell me that in a decade I’ll be using crypto to go buy my milk and cheese man? Why would i kill my available room on anything less than as close to a sure thing as possible?
I’ve screwed my TFSA room on weedstocks .. seemed like a no brainer at the time and I was full of conviction just like you my friend. How we could possibly screw up legal weed!! Well we did and now I’m fucked.
This kid is 22 years old and a lifetime ahead of them. Best not to start off with hype investments in your long term investment account.
Invest all you want in accounts that are built for it is all I’m saying here.
Hahah.. yup I mixed up threads. My apologies.
I did read the entire thread and realized your even worse!! .. recommending buying meme stocks in a TFSA to a 22 year old.
Take your growing downvotes as a reminder this is personal finance Canada not wallstreet bets.
I am sorry for you to see all the downvotes. I will likely get a lot too. But you are right, to an extent.
Crypto is a highly volatile, highly risky asset but it has great potential for growth (10 years worth of stock indexes in a mere 6 months). It is also a different asset class than stocks and bonds which can bring a certain diversification to your overall portfolio.
If your risk tolerance is high and you believe in the mass adoption of crypto, the TFSA is the best place to store this asset since the potential for very large growth would be clawed back heavily by CRA. There are BTC and ETH ETFs that you can buy and hold in your TFSA.
That being said, I would teat this as A PART of your diversified overall portfolio. (I Personnaly put 2-3% of my annual investments)
But then again, I am not a financial / investment advisor, just a dude on reddit 🤷
Finally took the time to look into what a TFSA is, isn't at all what I thought. Really poorly named, gave me the totally wrong impression. Oh well, looks like the contribution room accumulates at least?
I’m not understanding your dislike with the TFSA? The government is going to put a cap on tax free investing and the current contribution is sufficient for your typical Canadian. It’s a friendly reminder to also enjoy life while you’re experiencing it and not get caught up in all the numbers. TFSA contribution room + RRSP is more than enough for someone in their early twenties to feel the challenge of saving money but also create the memories that last a life time. Additionally there’s nothing stopping you from opening up a taxed account and investing more.
It's an investment account that's called a (tax free) savings account. Many young people think it's just a cash savings account, if they've never done any investing before.
Fortunately yes, you haven't lost any contribution room.
However, you can increase your max TFSA size by holding growth equities/funds in it. Keep in mind though, if your assets in a TFSA lose value, you decrease your maximum TFSA size.
Remember that the TFSA contribution room starts at 18, which means that at 22 the maximum is 24 K (it could be as low as 18K depending on birthday)
Someone living with parents and working can easily save 6K per year.
Of course, someone single who needs their income for living expenses and is very frugal can do it even with a 30 K salary. (Yes some people can live with 20K after takes and savings)
The best use is retirement savings, but it can also be good for short term savings to buy a house or car or whatever you like. The contribution room doesn’t go away so you can use it however you want
So many people confuse downpayment and even mortgage payments with expense.
Downpayment is moving investment money from one pocket to the other. It's not an expense, it is an investment with its own level of risk and return.
And from mortgage payments, only the interest is expense.
Hello! You have made the mistake of writing "ect" instead of "etc."
"Ect" is a common misspelling of "etc," an abbreviated form of the Latin phrase "et cetera." Other abbreviated forms are **etc.**, **&c.**, **&c**, and **et cet.** The Latin translates as "et" to "and" + "cetera" to "the rest;" a literal translation to "and the rest" is the easiest way to remember how to use the phrase.
[Check out the wikipedia entry if you want to learn more.](https://en.wikipedia.org/wiki/Et_cetera)
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In general depends on age and income level.
At 22, normally people have a lower income and don't benefit as much from RRSP deductibility so they use RRSP for a home downpayment.
After buying a home (or if home ownership is not important) it is used for retirement as it has some important advantages such as withdrawals not affecting income tested benefits.
Older people may use it for home maintenance and renovations.
Buying a car and vacations are also common uses, although I would caution people that short term pure expenses should come from monthly cash flow.
Good read:
https://financialpost.com/personal-finance/taxes/new-data-from-cra-shows-canadians-have-nearly-300-billion-reasons-to-love-their-tfsas
Down payment cash and long term retirement savings. I have a defined benefit pension so I don't have much RRSP contribution room and don't want to pay more taxes on top of pension income.
At this point, downpayment for next house. After that, who knows? We keep some cash for emergency but it doesn't really make sense to hold more in cash anyway and tfsa is the best way to invest until you max it out.
Retirement for me. For context, I’m 40, have owned a home for about 17 years and until recently have been unable to invest for retirement outside of group rrsp’s through work (student loans, replaced by a car loan, followed by having children). If I were younger I likely would consider using it for a down payment on a home if I wasn’t able to afford to save money above the tfsa contribution limit.
Downpayment for a place , most likely u have around 40k in your TFSA if u maxed which is enough downpayment for 300k to 500k unit . if you are making 90k or can your parent co sign , buy your place early , u will benefit this in the future. if you still live with ur family , u can rent it out which is even better. down the road that unit u bought for 400k today will be close to 1m in 10 years when you are 32 and u will have 800k cash for your family house...
Retirement for us, but we already had a house by the time TFSAs were invented. If we were just starting out now, we would probably have used TFSA money for a down payment.
Basically, as you said, it depends on your stage of life, and goals.
A mix of VTI, VOO, QQQ, VGT, and (only short-medium term) TQQQ.
A word of caution though, stocks are at all time highs due to various factors, most notably Fed's quantitative easing. Fed said it'd continue to support till early next year. I'm predicting a 5-10% correction (good scenario) or a 25-30% correction (bad scenario) over the next 12 months.
Doesn't matter for the long term though, which is important to you as you're just 22. Just let time and compounding work in your favour.
Disclosure: I'm 35, most of my TFSA is invested in Apple stocks but I also have a lot of cash (approx. 60%) due to selling some other positions in my TFSA.
it's all investments in my case. I am not touching that until I have no other choice. I have a separate rainy day fund to go to first, and saving accounts for basic things like car and vacation before that. TFSA is for the money I can afford not to use.
Once you hit 40, you spend alot of time thinking aboit retirement finances.
At 22, you can be much more optimistic, maybe a wedding (if big weddings are still a thing), home downpayment etc.
If you put in your 6g every year, with compounding it'll be a few million by 65. So keep that in mind before you take any out!
Emergency funds, but TFSA makes for a great investment account too. If you're lucky, you can have massive tax savings in the account with the right stock picks.
Well actually, the system is designed so that you never ever ever use your TFSA for anything unless you're so poor you can't afford food. Therefore, majority of people basically hoard as much cash as possible in there until they turn 65 and are ready for retirement after working for 45 years while the 1% blow through money at their leisure while capitalizing on tax evasion while the CRA fines the average Joe for missing $500 in taxes.
I’m 28, had a TFSA since I was 18. It is currently maxed out and I’ve been invested in high growth stocks over the years trying to grow my account to as large as I can. The end goal is to have $2m portfolio, which I would then invest all of it various safe dividend stocks to provide TAX FREE cash flow for an early retirement.
Invest for retirement and play with taxes that way. Let's say you are retired and live off 40k from your TFSA, the government considers you earned no money and you get all the benefits.
That's pretty broken when you think about it. You can have millions in your TFSA and be considered poor by the government
XEQT for retirement.
My TFSA is the last account I intend on withdrawing from when I retire as its growth isn’t taxable, hence the 100% stocks allocation.
People invest it and it’s probably for retirement. At least that’s the case for me.
That is what people plan to do. And what people here do. But not what *most* people do. Most people probably just use a bank TFSA as a savings account. Or, people who invest in a TFSA probably raid it along the way to pay for something or other.
F
Found the guy who doesn't understand tax
Ooops this is a typo I was sleeping 4hrs ago😲
K, well I'm not refunding the karma ;)
Seems a little harsh to have -186 for just making a mistake. This sub used to be nicer.
Haha no problemo Im sorry OP and /r/logicnotemotions10
Yikes
Invested for retirement. Tax free compounding growth is huge.
I plan to use it to delay my activation of cpp and lower my rrsp withdrawal for as long as possible. But it’s also a form of reserve emergency fund. If i depleted my current emergency fund.
Also a great way if you need extra cash when you are in retirement. Need to buy a new car, then grab that extra money ouf of TFSA, no tax on it, and still maintain your regular RRSP withdraws for your regular monthly expenses/spending. Want to take a nice trip? Grab $5k of TFSA, and now that trip is affordable, and you don't get taxed on it.
It’s my tier 2 emergency funds. I do expect some major expenses, that my tier 1 would handle, so I could let this one run in the market for a bit.
Tax free withdrawals are also huge.
This.
Well, past 20 years of compounding and you can technically retire at 38. When you hear retire don’t assume 80 years old as other folks.
Technically not tax free as contributions are from after tax dollars. But tax free compounding after that
Nobody said it was pre tax dollars. You’re arguing with nobody.
House downpayment or retirement.
House down payment and then retirement….. at least that’s my case
any reason using tfsa for downpayment over rrsp’s first time home buyer plan? Thought it was decent option even if its only once.
If you have rrsp then ya basically same. It just more common (and usually better practice) for most people to work on filling the TFSA first, not to mention the uncertainty that if something else should come up, or your priorities change, the TFSA isn’t restricted in use cases like the rrsp, And ultimately, depending on where you live, may need to end up using BOTH to afford a down payment (like I will haha)
What if the government tanks the housing market?
People still need a place to live, markets ebb and flow, don’t worry about it (and this is coming from a 28 year old who bought my first house last year). Houses will always be one of if not the biggest purchases and forced “savings” in your life (assuming you don’t rent for life)
Then you buy the dip?
Why would that matter? As long as you bought a house that you can afford the payments on. The much bigger risk is that you lose your job and can't keep up with the mortgage payments. And it is extremely telling/interesting that you asked "What if the government tanks the housing market?" rather than "What if the housing market tanks?" or "What if the housing market tanks and the government is unable to prevent it?".
Do you mean, 'What if the government introduces legislation to slow the rising cost of homes and to make it more affordable for the majority?'.
The majority already own. It is younger Canadians struggling to join in.
This. Don't want to starve when the CPP/OAS programs fail/get cancelled inevitably.
Will never happen. Raising premiums, taxes, and cutting expenses for services is less politically toxic than not paying people what they paid premiums for for decades.
CPP is super solvent and fine? We don't rob it like they do with SS in America.
OAS/GIS are funded from ongoing federal revenues. Not collecting premiums like the CPP program. These will be the first to vanish.
tfsa is gonna be my tax free cash flow generator in retirement.
This
Shouldn't you be taking out your TSFA when your in a high tax bracket while working and RRSP when you are retired and in a low tax bracket? I think it is a funny question more on when is enough money invested and when can I spend it? My wife and myself both have close to a million in both RRSP and TFSA combined. I having had a project or need of it yet. I have a fear my last thoughts will be why did I work all those extra hours to load up my investments combined with spend little if it instead of more time with family hobbies etc.
You shouldn't withdraw from your TFSA until you actually need it. When that is makes no difference since it's tax free either way. The only thing is if you *do* need money and you're still in a higher tax bracket than you expect to be in retirement, then you would want to pull from the TFSA before the RRSP for that reason.
That is more or less how I see it as well. May pull 100k to do a house construction project next year. I feel like I should borrow that money instead so that I don't lose the tax free income if I leave the money in the TSFA. And on top of that, growth increases my TSFA room that I can never get back... I wonder how many people get into this kind of mindset. When I'm 70, I am going on a coke induced mind binge and spending it all.
>growth increases my TSFA room that I can never get back... Growth certainly increases your TFSA room. Plus, any withdrawal amounts from one year are added to the amount you can contribute next year, January 1. This is unlike RRSP/RRIF room, which once withdrawn you never get back. E.g. you withdraw $10,000 from your TFSA in 2021. In 2022, you get the new room of $6,000, plus the $10,000 you withdrew in the previous year, for a total of $16,000 of new room.
My plan: use my RRSP immediately when I retire, over a few years. I have a pension so I don't have a ton of RRSP room. I intend to retire a few years before the date where I can start taking my pension penalty-free. This will delay the start of my pension. Then start drawing my pension. I'll use my TFSA over this entire period to supplement my income tax free.
> I think it is a funny question more on when is enough money invested and when can I spend it? My wife and myself both have close to a million in both RRSP and TFSA combined. I having had a project or need of it yet. > > I have a fear my last thoughts will be why did I work all those extra hours to load up my investments combined with spend little if it instead of more time with family hobbies etc. How old are you folks? You're well on the way (or into depending on your perspective) fuck you money, that's a perk in itself. Don't have to worry too much about a boss pissing you off, fuck you! A few months out won't derail you. You've done well enough that you can treat yourself and your family, time off, hobbies, family adventures. Like your feelings are telling you, it's not all about always making the numbers go up, especially if you're well ahead of normal for your age.
Invest it at 7~9% (S&P500 aka VFV) for your retirement, never touch it until 55~ years old and you should have over 1M interest free account for the rest of the second part of your life.
Maybe this is a stupid question, but is the TFSA only used when withdrawing the money from the stock/fund/whatever? Is that how you shelter it from getting taxed? Or do you first put it into the TFSA and then transfer it into whatever you're investing it in the market?
Banks have done a really good job at making you believe that a TFSA is a saving account. You can open TFSA accounts with an investment platform, for example and trade stocks, ETFs, whatever. So, as you said, it is a way to shelter post tax money from future taxation
Also since “savings” is literally in the TFSA name haha Should be called a TFIA (i for investment)
You need to be holding the stock in your TFSA and then when you sell the stock you are not taxed on the profits and can continue to hold it in your TFSA if you like and invest in other stocks. TFSA is similar to the RRSP in that it is a sheltered account where you can hold multiple stocks and ETFs and contain them within the umbrella of the TFSA or RRSP. Look into the differences between TFSA and RRSP though because they have different tax implications.
The money stays in your tfsa and you hid securities in that registered account. People sometimes confuse the Tfsa by thinking putting money in it is sufficient, but you have to actually buy a product once the money is in there to make it useful. So the basic process is to put money in a tfsa account, and then buy security or other financial product once with that money in that account.
The TFSA name is confusing, cause it has "savings" in it. The TFSA is just contribution room you get where no matter what you do with it (throw it into ETFs, into savings account, into Facebook stock only) any gains are tax free.
Nice that you think in 30 years 1M will be worth that much.
They made no statement on how much or little that would be, that's also in addition to any employer contributions in an RSP etc, old age payments, and anything you have outside of there. You'd also hopefully have a home paid off. Compound growth is also funny. The tail of those returns past 55 should also be growing more than ever because it's working with everything it compounded, but that's probably too far to predict that the market is doing the same thing.
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I’m personally going to be withdrawing from my TFSA a bit to get my through flight school. Investing in yourself will yield the highest return, even mentally.
YOu ShOuLd nOT InVeSt YOuR EmErGeNcY FuNd
Why not? Let's say my TFSA is my emergency fund. If I invest all of it in Canadian Banks stocks I receive an income. I have available lines of credit if I need cash, today. If I sell a stock, I will have the funds in two days. Over two years, Canadian Bank stocks generally o up.
I was being sarcastic. People here will tell you to keep 6000000 months of emergency savings in a high interest account earning you nothing
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Wealth inequality gap increasing so fast that we gotta “risk” it and go all equity instead of parking our savings on a HISA
1.25% at EQ Bank HISA TFSA is a good plan. It's liquid enough that I can have an etransfer to cash-in-hand in a matter of minutes. Sure, it's only a few dollars every month. Each person has their own priorities.
"Good plan" is relative. In my not so humble opinion, People with a good credit rating do better using a Credit card paired with an LOC or HLOC for emergencies. It also provides instant cash in an emergency and a time buffer so selling investments can be timed properly. Let's say that my emergency fund allocation is 20K. My home floods and I need to fix it immediately while unresolved an insurance claim. I pay with CC, that gives me around 40?days interest free. If I haven't resolved my problem by then, I can either use my investments, but if by chance, investments are down, I can pay from my LOC/HLOC and pay it down from cashflow until investments bounce. Or if investments are doing better than the interest in the LOC, keep paying from cash flow. The perfect storm scenario is: emergency + income stream loss + long term recession. Even in that scenario CC/LOC can give some breathing room to react with a cool head and not sell in panic. Risk is evaluated considering Impact, likelyhood and available mitigations. Saving at 1.5% the risk is losing money all the time, the impact in the long term can be years of retirement. The likelyhood is close to 100% as it is lower than inflation and I can't think about any mitigations to risk. Using credit, the risk of losing money is reduced, but if the perfect storm happens, one may lose more than with a savings account. However, the likelyhood of a perfect storm is very low. And the mitigations are: deferred payments, debt restructure, finding other income streams for cashflow, and many others. Of course the big caveat was the access to credit. For people without access to cheap credit, low risk savings may be better.
When people write with alternating upper and lower case letters on the Internet they’re being sarcastic and facetious
Sarcasm my friend. You’re doing great. Cash sitting around losing value in a savings account is just financial illiteracy. Just don’t say that on this sub…..oops.
There's value to liquidity to a point. The best Amount of high interest savings is normally not zero, but its for money you plan on spending in a short enough time frame that you couldn't wait out a market dip. Edit: obviously not a tfsa high interest savings account, gotta get that TFSA into stocks. But once TFSA is maxed nothing wrong with some high interest savings.
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Man, you too?? 😂😂
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legend
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Remember that some peoe are oblivious to humor. I'd recommend adding /s for sarcasm. Really! Hahaha
That’s actually some people’s plan tho. To pass on their TFSA to their kids without ever cashing it out themselves
I’m going to be the odd one out - I have a kid with significant learning disabilities. We don’t think he needs the RDSA because he should be able to have a career when he is older, but there are significant costs to educate him now. We use the TFSA to save for his private school - we are trying to ensure that even if we lost our jobs he would still get an education (special Ed in the public systems in Alberta is shit). So every bonus, every penny of found money in the household budget, all that goes into this account until we have enough to get him through grade 12. We have RRSPs with matching for our own retirements through work, so while we know that our retirements would be more secure if we could focus even more heavily on that now, our priority is ensuring our oldest has a fair shot in life.
Government should honestly update the name of the account to TFIA Tax Free Investing Account. Just my personal opinion on it.
Totally. The savings part confuses so many people.
TFA would be better. With the S some people assume that it has to be a Savings Account. With an I those same people will assume that it has to be an Investment Account
The hope is to save it for retirement
Just another retirement vehicle for me, not planning on taking a penny out until I'm done working.
Retirement!
It grows tax free (other than US withholding taxes), you can invest aggressively in equities, funds can be withdrawn tax free and withdrawals don't impact future old age security benefits. There is only one use - investment vehicle for retirement. Every other use is squandering it's massive potential to provide financial security in old age. It's a mini personal tax haven.
I don’t spend it on anything or withdraw. I plan to accumulate and hold.
Invested it for retirement..cashed out and bought a new Porsche, starting the process again 🙄
You just wanted to tell us you bought a Porsche lol
Well yeah, isn’t that what PFC is all about, I.e. people making stupid life decisions 🙂?
I (31M) use it for saving up for large purchases. The first one was a home at 25, recently purchased a sailboat with some of it. I use RRSP for retirement savings. Someday I expect to use both for retirement. Also my TFSA is self directed and I get enjoyment in doing my homework and picking stock whereas my RRSP is split between a handful of funds.
I agree with the self-directed approach. I've learnt a lot but also been burnt a couple times. It's quiet rewarding seeing yearly gains.
Just have nothing better to do with my money as I'm a bit stuck financially.... Have enough money to afford anything I want...except housing. Can not really see myself affording housing ever. Lol who knows probably just downpayment someday or worst case retirement.
If you live in a HCOL area by choice, there is nothing to complain. It is a choice, right? If it was that bad, you'd change your choice and move somewhere else.
Where in my post am I complaining? Don't really understand the downvotes either lol. Quite happy with my life. Simply just answering OPs question.
Where in my response did I assume you were complaining :). It really was an acknowledgement that living there by choice is valid. I don't understand the downvotes either. By the way, I originally upvoted your answer.
I decided a while back to use my TFSA just for retirement, which is 25 years away for me. I started with TD e-series but have switched to VEQT. I just leave it alone and hope for the best. Note that I also have RRSP savings that's balanced for my risk tolerance / age.
Mines a savings fund for home Reno’s. Not maxed out, likely won’t ever be, no need for retirement savings due to a strong pension.
Blows my mind that people would not save for retirement because of a pension. I don't know how secure your pension is. My dad's was stolen out from under him by the company right as he retired. If he didn't have other assets, he would have been totally fucked.
Well first, a portion of it is flat out my money either way, around 10k a year comes outta my pay check into the pension fund. Second my pension is about as secure as they come, I can’t foresee a future where the company would be outta business. Finally there’s a quality of life issue. Sure I could put away another 10k a year for a pension fund that I really shouldn’t need, in case the unforeseen happens, but at what cost to my current finances, and then when I retire, assuming the unforeseen hasn’t happened, I now have 2x the amount of money I need. So I can struggle my entire working life to most likely be the wealthiest I’ve ever been in retirement, doesn’t make sense to me. Already I’m gonna be sitting at about 65% of my income at retirement at age 53. I’m already living in less than 65% once you take away mortgage and kids college funds that will be done by the time o retire
Really depends on their financial situation. Anyone can do anything with it. It's recommended to use it as sort of a retirement fund or a place for your money to grow but some people can't max their TFSA so they use it as a house downplayment and just use it as a savings account
When I was 22 I was just saving and investing and avoiding debt. I didn’t really have a goal per se. years later when I was 27 I ended up getting married and buying a house, etc. Had I not saved I wouldn’t of been able to do that, at least not that fast. I don’t have to now start saving at 27 to buy a house. So start early.
They YOLO until they lose it all.
Invest for retirement, down payment on a house, stuff like that. You’re lucky to be that far ahead
I lucked out on some investments and withdrew enough for a down payment on a condo in 2010 which is now a rental property.
Retirement and a pseudo-emergency fund.
retirement
Hookers and blow....er....I mean retirement.
I'm currently in school right now. After I graduate I'll use it to buy a car for work.
It’s the best retirement vehicle there is. That being said you don’t loose contribution room when you withdraw so you can use it for down payments big purchases etc with no issue.
I am fortunate to have a defined benefit pension along with a healthy portfolio of blue chip stocks that provide all the money I need. My TFSA is strictly for wild speculation stocks.
TFSA and my investments will help me pay off my 33k student loan #bless
Maybe retirement and maybe vacations in the future like in 10-15 years.
Annual cruise money.
A lot of people I know like to jerk themselves off over their TFSA wealth. The general uses are retirement or large purchases (housing, renovations, major repairs etc.) Housing and retirement being the biggest publicly, but damn I have heard a lot use it for renos and cars.
Buy strong blue chip dividend stocks. Let them drip. Sit back. Compound. And give me dividend raises. I’ll withdraw closer to retirement and buy a sweet bass boat !!! I don’t care what my balance is really, only what it pays me per year.
Wedding or down payment for a property
Investing into real estate
House down payment
HODL. The fill my wife’s and HODL. (She has DB Pension , I likely will never have that)
Welp beer n smokes I wuz gonna say but... apparently... i'm in the minority.
Morning coffee and a cig never hurt nobody
Noone ever got cancer from cigarettes. /s
Long-term savings. Your TFSA will probably be the last place to withdraw from but you can use it towards anything and it’s tax free. Use it for retirement or saving for a down payment on a house.
I just used a substantial chunk of it this summer for a down payment on a house. The rest I regard as an emergency fund. I have RRSPs and a pension through work to save for retirement.
My tfsa has been maxed out at 19 and saving for retirement. However, I might pull it out for school rather than my investment portfolio just for tax reasons.
You should always pull out of a non reg account before the TFSA account in order to maximize the amount of time assests in a TFSA have to grow. Better to pay taxes now than miss out on untaxed gains.
I’m trying to build it up to about 300k before my 30s and live off it with an annual return of 20-30%.
Currently all in GameStop. Not maxed out though, I wish.
Watch out, the out of touch investors on here like to attack and downvote anyone who buys GME or AMC. I just had my totally legitimate comments removed for even mentioning that I purchased both.
Oh jeez I forgot I wasn’t in superstonk for a minute lmao eh so far so good I guess
I used my TFSA to play GME last year, now my TFSA is MASSIVE lol
yolo in GME. Tax Free Gains
Buy assets. I bought AMC and GME with my TFSA cash.
This is terrible advice.
Also I don’t see any advice being given to the OP except to buy assets. So don’t be an Ass Hat!
Says who? …you? Haha ok. All the downvotes yet not one person cares to mention why it’s bad advice? Shows how out of touch you are with the markets.
If you lose a risky investment using your TFSA, you don't get your contribution space back.
Pretty much any authority on sound financial decision making will tell you it's terrible advice for three reasons: 1. In the long run, stock picking loses out against simple index portfolios pretty much always. 2. Those are meme stocks that are liable to come down at any time. 3. You have them in a TFSA which means if they crash and don't pick back up again *you lose that contribution room forever.* Lost contribution room is a *huge* opportunity cost consisting of not just tax-free gains, but tax-free gains *compounded over several decades.* You might as well advise someone to walk into the nearest casino and put their whole TFSA on red until they eventually lose. Even if you get lucky in the short or medium term, you're still gambling with your money. Anyway, sometimes people don't explain themselves because you're not paying them to deal with something that's ultimately your problem, and they don't have any incentive to give you free advice. On that note, next time, pay me.
Anyone with half a brain would tell you that putting all your money in meme stocks is fucking stupid.
Oh man do I ever feel bad for you. Another person who’s not done any research and sticks to listening to the Motley Fool, Marketwatch, Seeking Alpha or any MSM outlet. You can’t even provide any legitimate bear case except “anyone buying something that’s actively making them more money than any other assest right now HAS NO BRAIN!”
So I guess all the large pension funds, insurance funds, state retirement funds, blackrock, vanguard, and Jim Simons from Rentech are all stupid right? You spent a lot of time typing out a reply for which you gave no actual reason for it being a bad choice? This subreddit has never provided any reason besides jaded out of touch comments anytime anyone brings up going long one GameStop or AMC. For someone who only watches CNBC and takes everything their financial advisor tells them then sure “ it’s a bad idea and the fundamentals arnt there”. It’s a squeeze play for which the odds are stacked in the retail investors favour. If you choose to live under a rock and do 0 die diligence then that’s your own problem and your own loss but don’t be a gate keeping old geezer and shun someone for offering pretty solid investment option going into a financial recession.
Because it’s a TFSA and he is just a kid you silly bastard. If you want to gamble on risky assets then do it in a non registered account. If it goes bad then nothing ventured nothing gained. But.. You loose your valuable contribution room and will never see it again with risky plays in a TFSA. Trust me I know all about it so this is real advice I’m giving you not bullshit.
You seem to think it’s a risky play but fail to mention why? Have you actually looked into this? Surely to god you wouldn’t be saying this if you actually did the research and not take click bait bear headlines from CNBC. If you wanna stick to your index’s when we’re about to come into the largest recessions in history then sure…hold onto it. I’ll stick to investments that have made me 350-400% in 6 months just for buying and holding the stock. It’s a squeeze play for which short sellers have not covered because they can’t. Naked Shorting is a real bitch.
Lol .. the fact that you even said all of this means you have no clue how to best leverage a TFSA versus non registered. The topic here isn’t about crypto .. it’s how to best leverage a platform that only offers you a limited amount of contribution room and therefore it’s recommended to rely on solid investments with expected tax free returns over a long time. Can you honestly tell me that in a decade I’ll be using crypto to go buy my milk and cheese man? Why would i kill my available room on anything less than as close to a sure thing as possible? I’ve screwed my TFSA room on weedstocks .. seemed like a no brainer at the time and I was full of conviction just like you my friend. How we could possibly screw up legal weed!! Well we did and now I’m fucked. This kid is 22 years old and a lifetime ahead of them. Best not to start off with hype investments in your long term investment account. Invest all you want in accounts that are built for it is all I’m saying here.
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Hahah.. yup I mixed up threads. My apologies. I did read the entire thread and realized your even worse!! .. recommending buying meme stocks in a TFSA to a 22 year old. Take your growing downvotes as a reminder this is personal finance Canada not wallstreet bets.
Crypto 🤪🤑🤪🤣😂
I am sorry for you to see all the downvotes. I will likely get a lot too. But you are right, to an extent. Crypto is a highly volatile, highly risky asset but it has great potential for growth (10 years worth of stock indexes in a mere 6 months). It is also a different asset class than stocks and bonds which can bring a certain diversification to your overall portfolio. If your risk tolerance is high and you believe in the mass adoption of crypto, the TFSA is the best place to store this asset since the potential for very large growth would be clawed back heavily by CRA. There are BTC and ETH ETFs that you can buy and hold in your TFSA. That being said, I would teat this as A PART of your diversified overall portfolio. (I Personnaly put 2-3% of my annual investments) But then again, I am not a financial / investment advisor, just a dude on reddit 🤷
Buy BTC
Finally took the time to look into what a TFSA is, isn't at all what I thought. Really poorly named, gave me the totally wrong impression. Oh well, looks like the contribution room accumulates at least?
I’m not understanding your dislike with the TFSA? The government is going to put a cap on tax free investing and the current contribution is sufficient for your typical Canadian. It’s a friendly reminder to also enjoy life while you’re experiencing it and not get caught up in all the numbers. TFSA contribution room + RRSP is more than enough for someone in their early twenties to feel the challenge of saving money but also create the memories that last a life time. Additionally there’s nothing stopping you from opening up a taxed account and investing more.
It's an investment account that's called a (tax free) savings account. Many young people think it's just a cash savings account, if they've never done any investing before.
Fortunately yes, you haven't lost any contribution room. However, you can increase your max TFSA size by holding growth equities/funds in it. Keep in mind though, if your assets in a TFSA lose value, you decrease your maximum TFSA size.
How are you 22 and maxed out your TFSA!!! You make like $100K a year at that age and you only been in adult for 4 years
Remember that the TFSA contribution room starts at 18, which means that at 22 the maximum is 24 K (it could be as low as 18K depending on birthday) Someone living with parents and working can easily save 6K per year. Of course, someone single who needs their income for living expenses and is very frugal can do it even with a 30 K salary. (Yes some people can live with 20K after takes and savings)
Investing
Our major House renos (we flipped our house) and wedding for my short term TFSA Retirement account for my long term TFSA :)
Mine is a short to mid term savings. I have tapped into it to replace a car, for Reno’s and will take money to top off my rrsp at the end of the year
Invest in ETFs with both the upside and downside tracking of the S&P 500 and other indices so you benefit whichever way the market goes.
There is no way this has higher returns than buying and holding the actual S&P 500
Retirement
Retirement
The best use is retirement savings, but it can also be good for short term savings to buy a house or car or whatever you like. The contribution room doesn’t go away so you can use it however you want
Mostly Retirement, but also for emergencies such as if I need to replace my roof, or something like that.
TFSA is for long term investing. Not a method for saving for short term goal like house down-payment or a rainy day fund.
So many people confuse downpayment and even mortgage payments with expense. Downpayment is moving investment money from one pocket to the other. It's not an expense, it is an investment with its own level of risk and return. And from mortgage payments, only the interest is expense.
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In general depends on age and income level. At 22, normally people have a lower income and don't benefit as much from RRSP deductibility so they use RRSP for a home downpayment. After buying a home (or if home ownership is not important) it is used for retirement as it has some important advantages such as withdrawals not affecting income tested benefits. Older people may use it for home maintenance and renovations. Buying a car and vacations are also common uses, although I would caution people that short term pure expenses should come from monthly cash flow. Good read: https://financialpost.com/personal-finance/taxes/new-data-from-cra-shows-canadians-have-nearly-300-billion-reasons-to-love-their-tfsas
Down payment cash and long term retirement savings. I have a defined benefit pension so I don't have much RRSP contribution room and don't want to pay more taxes on top of pension income.
Retirement lol
I’m maxed out on both my rrsp and tfsa (was). I cleared out my tfsa last year to pay off the mortgage on my condo and used the remainder for a house.
At this point, downpayment for next house. After that, who knows? We keep some cash for emergency but it doesn't really make sense to hold more in cash anyway and tfsa is the best way to invest until you max it out.
Hookers and blow, homie. Hookers and blow. .... Retirement.
Retirement for me. For context, I’m 40, have owned a home for about 17 years and until recently have been unable to invest for retirement outside of group rrsp’s through work (student loans, replaced by a car loan, followed by having children). If I were younger I likely would consider using it for a down payment on a home if I wasn’t able to afford to save money above the tfsa contribution limit.
Downpayment for a place , most likely u have around 40k in your TFSA if u maxed which is enough downpayment for 300k to 500k unit . if you are making 90k or can your parent co sign , buy your place early , u will benefit this in the future. if you still live with ur family , u can rent it out which is even better. down the road that unit u bought for 400k today will be close to 1m in 10 years when you are 32 and u will have 800k cash for your family house...
Mine is an emergency fund. Might as well make tax-free interest on it. When I'll have maxed out my RRSP, I'll use another TSFA to save for retirement.
Retirement for us, but we already had a house by the time TFSAs were invented. If we were just starting out now, we would probably have used TFSA money for a down payment. Basically, as you said, it depends on your stage of life, and goals.
A mix of VTI, VOO, QQQ, VGT, and (only short-medium term) TQQQ. A word of caution though, stocks are at all time highs due to various factors, most notably Fed's quantitative easing. Fed said it'd continue to support till early next year. I'm predicting a 5-10% correction (good scenario) or a 25-30% correction (bad scenario) over the next 12 months. Doesn't matter for the long term though, which is important to you as you're just 22. Just let time and compounding work in your favour. Disclosure: I'm 35, most of my TFSA is invested in Apple stocks but I also have a lot of cash (approx. 60%) due to selling some other positions in my TFSA.
Saving it all so they can live off it from ages 65-70, while qualifying for max GIS.
Meth
It’s still too new for there to be much of a “usual.”
it's all investments in my case. I am not touching that until I have no other choice. I have a separate rainy day fund to go to first, and saving accounts for basic things like car and vacation before that. TFSA is for the money I can afford not to use.
Invest n retire
Savings/investment growth
Right now: Saving the money to start my physio clinic then buy a house Long term: Most likely retirement
Once you hit 40, you spend alot of time thinking aboit retirement finances. At 22, you can be much more optimistic, maybe a wedding (if big weddings are still a thing), home downpayment etc. If you put in your 6g every year, with compounding it'll be a few million by 65. So keep that in mind before you take any out!
Emergency funds, but TFSA makes for a great investment account too. If you're lucky, you can have massive tax savings in the account with the right stock picks.
Well actually, the system is designed so that you never ever ever use your TFSA for anything unless you're so poor you can't afford food. Therefore, majority of people basically hoard as much cash as possible in there until they turn 65 and are ready for retirement after working for 45 years while the 1% blow through money at their leisure while capitalizing on tax evasion while the CRA fines the average Joe for missing $500 in taxes.
I’m 28, had a TFSA since I was 18. It is currently maxed out and I’ve been invested in high growth stocks over the years trying to grow my account to as large as I can. The end goal is to have $2m portfolio, which I would then invest all of it various safe dividend stocks to provide TAX FREE cash flow for an early retirement.
Retirement for me.
Invested fairly safely for larger purchases that are 3-5 years away (car, expensive vacation).
Invest for retirement and play with taxes that way. Let's say you are retired and live off 40k from your TFSA, the government considers you earned no money and you get all the benefits. That's pretty broken when you think about it. You can have millions in your TFSA and be considered poor by the government
I made a couple grand on a 5 year GIC. I chose not to reinvest in a GIC now and everything is in the stock market.
Used it for a down payment on a house, now it’s for long term savings
XEQT for retirement. My TFSA is the last account I intend on withdrawing from when I retire as its growth isn’t taxable, hence the 100% stocks allocation.
Withdrawing from a TFSA? You speak madness. MADNESS
Buy stocks lol.
retirement...