TFSAs can help generate significant investment tax savings over the long term From m_zadikian
Canadians who don't properly invest the money in their TFSA risk losing out on long-term tax savings, wealth advisors say.
The latest data available from Statistics Canada showed more than 15.3 million Canadians had a TFSA as of the 2019 tax year.asked three financial experts across the country about the biggest mistakes Canadians are making with their TFSA.The word 'savings' in the account name might skew some individuals' perception about what the account should be used for, says Mia Karmelic, an executive financial consultant at IG Wealth Management in Toronto.
"I would suggest that the funds within the TFSA be invested in a diversified portfolio according to an individual's risk tolerance, while keeping a long-term investment horizon in mind," Karmelic said.Opportunity cost, or the risk of losing out on potential gains when choosing one investment over another, is a big issue for Canadians that treat their TFSA as a short-term savings account, says Alim Dhanji, a senior financial planner at Assante Financial Management in Vancouver.
The good news is contribution room accumulates each year, but investors need to be extra careful about their contribution limits, especially if they've withdrawn money in the current year or have multiple TFSAs. "Let's say you withdrew $8,000 last year. When January 2023 comes around, you not only have the additional annual room of $6,500 that all Canadian residents 18 and older receive, but you also get the $8,000 contribution room added to your total room as well," she said.
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