If you are ready to get a jumpstart on financial planning for the future, you should strongly consider opening a tax-free savings account (TFSA). Recently, the contribution limit for these accounts was raised from $5,500 to $10,000. With the enactment of this change, many Canadians, like you, will be given the opportunity to save funds for the future at a significantly higher rate, tax-free.
How are TFSAs Different from Other Savings Vehicles?
These savings accounts, which are often used for retirement financial planning purposes, are different from other savings vehicles for two main reasons. First, when you make a contribution to a TFSA, the funding it accumulates is exempt from taxation. Second, when you withdrawal from a TFSA account for a specific venture, you can then rebuild these savings for future expenditures.
Uses for TFSA Savings
When it comes to financial planning, the funds in your TFSA can be used for other purposes instead of just for retirement because they can be added to time and time again. For example, you may benefit from using the funds in a TFSA to save for emergencies—for example, if you were unemployed and had to pay for a medical procedure without insurance.
Understanding Your Options
The first thing you need to do in order to benefit from opening a TFSA is to gain a better understanding of how these accounts differ from other savings options and why they are a cost-effective solution. For more information, please contact us at BlueRock Wealth Management Inc. today.