What’s the point of TFSAs?
Although TFSAs have been around for a decade now, there’s still a lot of questions surrounding them. Ideally, it would be great if people are able to contribute the maximum allowable contribution amount to both their RRSP and TFSA. However, it’s often not possible due to the many other financial obligations people have in their lives. Generally, if your income is higher now than it will be when you are going to use the money, then an RRSP might be the best choice for you. On the flipside, if your income is lower now than it will be when you go to use the money, then a TFSA may be the better choice.
There are numerous reasons to open a TFSA. For example, it may be related to your income level or perhaps it’s a more appealing option because there isn’t any mandatory withdrawal age or amount, and the earnings and withdrawals are tax-free. Another factor is that there’s no impact on government benefits and you can choose from a wide variety of investments to hold within the TFSAs, which means that if you don’t need the money for some time, you can take full advantage of the tax free growth aspect. To find out which option is best for you, make sure to find a qualified advisor to help.