The TFSA is ‘probably the worst-named product in the investment world. They probably should have called it a tax-free investment account or something along those lines,’ says Stuart Gray, director of RBC’s Financial Planning Centre of Expertise.It’s been a little more than a decade since the former federal Conservative government introduced the tax-free savings account as a financial planning tool to help Canadians increase their net worth.
Although some Canadians are drawn to the flexibility of having cash in their TFSAs, Mr. Gray says they’re missing out on the advantage of using the account to invest in a variety of products and to benefit from compounding, tax-free returns. “Advisors have an opportunity to engage and educate clients around the benefits of [using both] an RRSP and a TFSA,” he adds.A big reason for Canadians’ misunderstanding about the TFSA is that, for years, financial services institutions have encouraged investors to open TFSAs, often without explaining the various benefits, says Rona Birenbaum, certified financial planner and founder of Toronto-based fee-only financial planning firm Caring for Clients.
“A short-term emergency fund is fine in a high-interest vehicle, while longer-term goals should be more growth-oriented and include equities and fixed-income [securities] or ETFs,” Ms. Birenbaum notes. Sylvain Brisebois, senior investment advisor and portfolio manager at BMO Nesbitt Burns Inc. in Ottawa, says the TFSA has been marketed broadly as a quick and accessible account when the focus should really be on the “tax-free” element instead.
Canada Latest News, Canada Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Source: globeandmail - 🏆 5. / 92 Read more »
Source: CTVNews - 🏆 1. / 99 Read more »
Source: Sportsnet - 🏆 57. / 59 Read more »
Source: CTVNews - 🏆 1. / 99 Read more »
Source: globeandmail - 🏆 5. / 92 Read more »
Source: globeandmail - 🏆 5. / 92 Read more »