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The tax-free savings account is a wonderful tool to utilize for your financial goals. There are a variety of benefits to investing in a TFSA account including tax-sheltered growth, a variety of investment options, and flexibility on withdrawals. This episode is perfect for anyone who already has a TFSA account and is just looking to get a better understanding, or for those of you who are looking to get one started!
About the Host:
I am a financial professional, who specializes in helping people to achieve their financial goals. My absolute passion is creating new possibilities in people’s lives by showing them the ropes when it comes to money. I’m here to spark healthy and positive conversations around wealth and investment and create a world where nobody is limited by their financial situation. I believe this begins with education and shifting our relationships with money. I love getting to witness people achieving their most ambitious goals and creating new possibilities for themselves and their families!
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Welcome to the wealth and wellness podcast with
Kalee Boisvert:me Kaylie Bob air, I specialize in helping people to achieve
Kalee Boisvert:their financial goals. I have a love for all things numbers, and
Kalee Boisvert:I'm passionate about financial literacy. My goal is to spark
Kalee Boisvert:healthy and positive conversations around wealth and
Kalee Boisvert:investment, and create a world where nobody is limited by their
Kalee Boisvert:financial situation. But wealth is just one piece of the
Kalee Boisvert:equation of living our best lives. So join me as we explore
Kalee Boisvert:both wealth and wellness topics. From your net worth to your self
Kalee Boisvert:worth, get ready to take confident action. Hello, this is
Kalee Boisvert:Kaylee. And thank you for listening to this episode of the
Kalee Boisvert:wealth and wellness Podcast. Today I wanted to talk all about
Kalee Boisvert:TFSA accounts Tax Free Savings accounts. So this is a very, I
Kalee Boisvert:guess, Canadian focus topic of conversation today. So a Tax
Kalee Boisvert:Free Savings Account wanted to talk about them because they are
Kalee Boisvert:a popular topic of conversation when it comes to investing, and
Kalee Boisvert:especially to start the new year because you do get added
Kalee Boisvert:contribution room if you're eligible to have a TFSA account.
Kalee Boisvert:And we'll talk a little bit about that in one moment. But
Kalee Boisvert:again, a reason to chat about them right now, because they
Kalee Boisvert:might be on your mind Tax Free Savings accounts. So what is a
Kalee Boisvert:Tax Free Savings Account, it is a registered plan that allows
Kalee Boisvert:people who are 18 or older and have a valid Social Insurance
Kalee Boisvert:Number, so you have to have a valid cin number and reside in
Kalee Boisvert:Canada. So it allows these individuals to save up to a
Kalee Boisvert:certain amount of money each year without paying taxes on the
Kalee Boisvert:earnings, a TFSA TFSA accounts were introduced in 2009. And
Kalee Boisvert:they started by allowing individuals to put in up to
Kalee Boisvert:$5,000 in these accounts, and then they proceeded to add
Kalee Boisvert:additional contribution each year since so what does that
Kalee Boisvert:look like as of today in 2022, you would have $81,500 in
Kalee Boisvert:contribution room, if you were the age 18 or older, since the
Kalee Boisvert:start date, which was 2009. So as of today, 2022, you have
Kalee Boisvert:$81,500 in contribution room. And what that looks like as far
Kalee Boisvert:as like historically, limit contribution limits. Again, they
Kalee Boisvert:started in 2009. So from 2009 to 2012, they added $5,000 per
Kalee Boisvert:year, in 2013. They increased it slightly so 2013 2014 5500. In
Kalee Boisvert:2015, they upped it to $10,000. And then 2016, they brought it
Kalee Boisvert:back down 5500 5500 5500 2019. They increased it slightly to
Kalee Boisvert:$6,000. And again, sort from 2019 to 2022. It's been $6,000
Kalee Boisvert:per year. And that's what brings us to the grand total of $81,500
Kalee Boisvert:in contribution room as of 2022.
Kalee Boisvert:So, as far as TFSA accounts, they do serve to shelter any
Kalee Boisvert:earnings from taxes. So think of a tea. FSA, think of the TFSA is
Kalee Boisvert:just the shell, it's the account, it's just a type of
Kalee Boisvert:account. It's nothing in itself a Tax Free Savings Account. It's
Kalee Boisvert:nothing, it's just a type of account. Also, I find the name
Kalee Boisvert:is a bit of a misnomer, and it causes some confusion. So it's
Kalee Boisvert:called a Tax Free Savings Account, which leads people to
Kalee Boisvert:believe it's only meant to function like a savings account
Kalee Boisvert:and hold cash. But that is not at all the case. And it would be
Kalee Boisvert:probably better off to call it a tax free investment account.
Kalee Boisvert:Because within a Tax Free Savings Account, you can hold
Kalee Boisvert:all different types of investments, anything from GIC,
Kalee Boisvert:stocks, bonds, mutual funds, ETFs. Again, there, the list is
Kalee Boisvert:very long, and there's an array of options. Generally the only
Kalee Boisvert:limitation on that being where you're invested with the firm
Kalee Boisvert:you're with. So at a bank level, you might have fewer options, it
Kalee Boisvert:might only be granted as somewhere where you can put cash
Kalee Boisvert:in but if you do more of like a direct investing, or if you're
Kalee Boisvert:working with a wealth management firm, or something beyond that,
Kalee Boisvert:maybe a robo advisor type setup or something like that,
Kalee Boisvert:generally you're going to have access to more options. So a big
Kalee Boisvert:difference between people often think of TFSA versus RRSPs,
Kalee Boisvert:because those are the two. Those are two big types of registered
Kalee Boisvert:accounts here in Canada. So, a big difference of what
Kalee Boisvert:differentiates a Tax Free Savings Account from a
Kalee Boisvert:Registered Retirement Savings Plan is that your contributions
Kalee Boisvert:to the TFSA account are not tax deductible. So you're not going
Kalee Boisvert:to get any sort of refund for contributing to the account a
Kalee Boisvert:TFSA account as you would with an RSP account. So, again, the
Kalee Boisvert:money you're putting in is after tax, you will not receive any
Kalee Boisvert:sort of, you know, credit or refund for putting in that
Kalee Boisvert:amount to a TFSA. But again, the benefit is really all about that
Kalee Boisvert:tax sheltered growth, you put the money in, and once it's in
Kalee Boisvert:the TFSA, you can do all sorts of investing. And everything
Kalee Boisvert:within that account is tax sheltered, so any growth, any
Kalee Boisvert:investment income, capital gains, dividend payments, all
Kalee Boisvert:sheltered. So let's say you put $5,000 into the account, and
Kalee Boisvert:your investment doubled in price over the coming year. And let's
Kalee Boisvert:say now, it's $10,000, your 5000 became $10,000, the stock you
Kalee Boisvert:bought was a great one, and you've made lots of money, and
Kalee Boisvert:you so you decide to maybe sell the investment. Well, what
Kalee Boisvert:happens nothing, because it's in a Tax Free Savings Account. So
Kalee Boisvert:there's no tax implications, there's no reporting that you
Kalee Boisvert:need to do, it's all just fine, you bought the the investment
Kalee Boisvert:you did well on it, you sold it great. Your Tax Free Savings
Kalee Boisvert:Account has, you know, gone up in value, you've made some money
Kalee Boisvert:in there. But again, nothing to report, nothing you have to
Kalee Boisvert:advise CRA of. It's all tax sheltered. Let's say for
Kalee Boisvert:instance, you buy a stock that pays dividends, and the
Kalee Boisvert:dividends are paid on a quarterly basis and the stock
Kalee Boisvert:you hold in your TFSA account, those dividends is paying will
Kalee Boisvert:simply just be added to the account. And at year end,
Kalee Boisvert:there's no tax reporting, you don't have to disclose the
Kalee Boisvert:dividends you received. Because again, the account is completely
Kalee Boisvert:tax sheltered, and your investment holding is within
Kalee Boisvert:that tax sheltering account. So nothing needs to be disclosed to
Kalee Boisvert:CRA, there is no tax implication. So overall, these
Kalee Boisvert:accounts are an amazing tool to use for investing. And they,
Kalee Boisvert:they save you from a lot of taxes, obviously, by allowing
Kalee Boisvert:that money to grow tax free that tax sheltering is a huge benefit
Kalee Boisvert:when it comes to investing. Because when we invest, the goal
Kalee Boisvert:is to make money in some form, whether it's interesting,
Kalee Boisvert:through dividends, capital gains.
Kalee Boisvert:Again, we like to see increasing values, adding our accounts
Kalee Boisvert:growing. And the great thing with a Tax Free Savings Account
Kalee Boisvert:is that can all be happening and done and there's not going to be
Kalee Boisvert:a tax implication, there are very flexible in that you can
Kalee Boisvert:withdraw from the account at any time. And when you take the
Kalee Boisvert:money out, there's no tax implications, either I should
Kalee Boisvert:turn my phone down. So think of it again, you bought that stock
Kalee Boisvert:for 5000, it went up to $10,000 in value your holding, you sold
Kalee Boisvert:the investment, maybe you said oh, I'm gonna you know, I've
Kalee Boisvert:been saving up for this big vacation or this is gonna go
Kalee Boisvert:towards a down payment on a house or whatever the reason is,
Kalee Boisvert:you take out let's say you take out that $10,000. And again,
Kalee Boisvert:you're nervous. Oh, you know, part of that was growth, it
Kalee Boisvert:wasn't all money I put in, I only put $5,000 in the other
Kalee Boisvert:$5,000 I made. Again, you still can take it out no tax
Kalee Boisvert:implication. So again, yay, tax free wins, wins again. And when
Kalee Boisvert:you're withdrawing that money, so it's not impacting your
Kalee Boisvert:income at all, because you're taking the money out, no tax to
Kalee Boisvert:report. It's not increasing your yearly income. So for people
Kalee Boisvert:that are receiving gov, like benefits, such as like Old Age
Kalee Boisvert:Security or anything like that, your Tax Free Savings amounts,
Kalee Boisvert:if you're taking out money from there, it's not going to impact
Kalee Boisvert:those those amounts. So it's not that you're going to get into
Kalee Boisvert:clawback territory with OAS, or anything like that it won't
Kalee Boisvert:impact your income when you take money out of a TFSA account. So
Kalee Boisvert:you can take it out and use it for a variety of purposes. Maybe
Kalee Boisvert:you have a targeted goal, like you're saving up for a down
Kalee Boisvert:payment on a home. And that's what you're using your Tax Free
Kalee Boisvert:Savings Account. Maybe it's for a bigger purpose or goal such as
Kalee Boisvert:towards your financial freedom or your retirement number. And
Kalee Boisvert:this type of account can really complement. If you have let's
Kalee Boisvert:say you have a pension and you or your your company's doing RSP
Kalee Boisvert:matching, you're doing it through there you have RSP have
Kalee Boisvert:a RIF account. TFSA 's are a great tool to have as a
Kalee Boisvert:compliment for retirement income as well. It's just going to
Kalee Boisvert:serve as another bucket essentially to be pulling from
Kalee Boisvert:and one that doesn't impact your yearly income so it's not going
Kalee Boisvert:to push you into a higher tax bracket. A few things to keep in
Kalee Boisvert:mind with a Tax Free Savings Account. Your contribution room
Kalee Boisvert:does carry forward. So if you don't have one yet, or you
Kalee Boisvert:haven't started one, the year you know you didn't Start one in
Kalee Boisvert:2009, when they originated, that's completely okay. You can
Kalee Boisvert:do so any time. And you'll still have the same accumulated room.
Kalee Boisvert:Again, caveat being that you were over 18 and resided in
Kalee Boisvert:Canada. So you accumulate room for years that you are residing
Kalee Boisvert:in Canada, if you live outside of Canada, for a year or
Kalee Boisvert:something like that, you will not receive contribution room
Kalee Boisvert:for that year. So do keep that in mind. And again, it's based
Kalee Boisvert:on being over 18 years of age.
Kalee Boisvert:So if you do don't have a TFSA, or have never opened one,
Kalee Boisvert:completely, okay, there's no time like the present to get one
Kalee Boisvert:started. And this is a great conversation to for parents,
Kalee Boisvert:it's a great idea. I'm all about, you know, starting kids
Kalee Boisvert:early starting your children investing, what a great idea for
Kalee Boisvert:when your child turns 18 years old, maybe, you know, encourage
Kalee Boisvert:them to start a Tax Free Savings Account, they get that room the
Kalee Boisvert:year they turn 18. So if they turn it in, you know, February
Kalee Boisvert:of this year, that's when they will start accumulating the
Kalee Boisvert:room, like they get the $6,000 room for 2022, you can open the
Kalee Boisvert:account for them. And they can get started investing and maybe
Kalee Boisvert:that's a you know, it's a great idea as a birthday present to
Kalee Boisvert:maybe you give them some money for a contribution to their TFSA
Kalee Boisvert:account. And then they can get started with some investing. So
Kalee Boisvert:a great tool to to get young people started I love when I'm
Kalee Boisvert:working with people and clients and they start talking about
Kalee Boisvert:children like what are now becoming, I guess, adults, and
Kalee Boisvert:getting them started when they're 18 years. So it's a
Kalee Boisvert:really good conversation to have with your kids really great idea
Kalee Boisvert:to get your kids started with a Tax Free Savings Account. Also,
Kalee Boisvert:keep in mind that TFSA contribution room can be
Kalee Boisvert:different for everyone. So it's not as simple as saying it's
Kalee Boisvert:$81,500 room if you've been residing in Canada since 2009,
Kalee Boisvert:and have been over 18. Since then, there are some different
Kalee Boisvert:nuances to that. And the reason being is that if you make
Kalee Boisvert:withdrawals from your TFSA, at any point in time, you actually
Kalee Boisvert:get that room back as well the following year. So let's say go
Kalee Boisvert:back in time a little bit, let's say it's December of 2021. And
Kalee Boisvert:you took out $5,000 from your TFSA account for whatever
Kalee Boisvert:reason. Up until that time, let's say two that you were
Kalee Boisvert:fully maxed on your contributions, so you're fully
Kalee Boisvert:Max, and then you take out $5,000 room that are $5,000 cash
Kalee Boisvert:that year. Well, as soon as you hit January 1 2022. So as soon
Kalee Boisvert:as the New Year hits, you receive the additional $6,000
Kalee Boisvert:room that everyone received, that was added to everyone's
Kalee Boisvert:contribution room. But you will also have that $5,000 room added
Kalee Boisvert:back from the withdrawal you made in 2021. So in that case,
Kalee Boisvert:your TFSA room has actually become at $6,500. Because you
Kalee Boisvert:had taken that $5,000 out. And that was done last year. And now
Kalee Boisvert:it is added back this year. Again, if you took out $10,000
Kalee Boisvert:Last year, you would have $10,000 additional room to add
Kalee Boisvert:this year. So it's again, it's based on whatever you withdrew,
Kalee Boisvert:you get that room back the following year. So people can
Kalee Boisvert:actually now have all sorts of numbers there because maybe
Kalee Boisvert:they've made withdrawals in a few years or maybe, you know,
Kalee Boisvert:they made one big withdrawal in one year. And now they receive
Kalee Boisvert:that room back the following year. So that can get a little
Kalee Boisvert:tricky and, and your room can get a little bit more
Kalee Boisvert:challenging to track as a result. But you know, make sure
Kalee Boisvert:that you are being diligent about tracking, okay, so again,
Kalee Boisvert:knowing that you get that extra room it can or not, not extra,
Kalee Boisvert:you get basically the room from what you took out, you get it
Kalee Boisvert:back the following year. So do do keep that in mind. You don't
Kalee Boisvert:just have to say okay, the room is at 1500 That's what mine
Kalee Boisvert:would be because yours might be different. The best place to
Kalee Boisvert:double check your Tax Free Savings Account room is your CRA
Kalee Boisvert:my account. However, please keep in mind that the number on there
Kalee Boisvert:is likely. It's generally always updated annually and they're
Kalee Boisvert:usually couple months slow. So let's say it's already end of
Kalee Boisvert:January. Let's say you were to check your your contribution
Kalee Boisvert:room for your TFSA on your My account. The number it shows
Kalee Boisvert:there might not be recording what you contributed in 2021
Kalee Boisvert:Yet, it might still have not updated yet. So what that would
Kalee Boisvert:be telling you is it's still showing what you had in 2021
Kalee Boisvert:Plus it added the room for 2022 it added $6,000
Kalee Boisvert:You want to make sure you minus anything you contributed in
Kalee Boisvert:2021, if it has yet to be updated, or you can also just
Kalee Boisvert:check back within the coming weeks here, just to make sure
Kalee Boisvert:you have that up to date number, you do want to avoid over
Kalee Boisvert:contributing to the Tax Free Savings Account, as CRA will
Kalee Boisvert:charge a penalty of 1% interest per month on the amounts that
Kalee Boisvert:exceed your room until you withdraw it. So they'll keep
Kalee Boisvert:charging at 1% per month, any if you've gone over, and they don't
Kalee Boisvert:necessarily alert you right away. So it's not one of those
Kalee Boisvert:things that if you've gone over, and you're you know, a couple
Kalee Boisvert:days in or a month in series gonna reach out and say, Oh, see
Kalee Boisvert:you over contributed, make sure you take it out. No,
Kalee Boisvert:unfortunately, generally, it takes them a while. And I mean,
Kalee Boisvert:by all means there's a lot of people with these accounts and a
Kalee Boisvert:lot of sort of differences to the room and numbers as we sort
Kalee Boisvert:of we discovered with the idea of taking money out and things
Kalee Boisvert:like that. So let's not completely blame CRA and, and
Kalee Boisvert:think that they're evil for trying to charge us with large
Kalee Boisvert:penalties, there is a big amount of record keeping that goes on
Kalee Boisvert:with these two. So do keep in mind that the onus is really on
Kalee Boisvert:you and work with your financial professional, if you work with
Kalee Boisvert:one really to track this and make sure it's the don't really,
Kalee Boisvert:you know, accept excuses like Woopsie, or I didn't realize or
Kalee Boisvert:something like that they're pretty to the point care,
Kalee Boisvert:unfortunately. Um, so again, be very mindful. Another thing to
Kalee Boisvert:keep in mind is you can have multiple TFSA accounts. And you
Kalee Boisvert:can have multiple accounts with one institution, you can have it
Kalee Boisvert:across a few companies or different firms. But again,
Kalee Boisvert:always being mindful of your room two accounts or three
Kalee Boisvert:accounts does not mean you get double or triple the
Kalee Boisvert:contribution room, you still have the same room. So be
Kalee Boisvert:mindful, if you have multiple accounts, you can move your TFSA
Kalee Boisvert:account between institutions as well. But it says important that
Kalee Boisvert:is processed as a transfer. So you want to make sure that the
Kalee Boisvert:TFSA goes to another TFSA. And it goes over as a transfer not
Kalee Boisvert:that you take it out of the TFSA and then put it back into a
Kalee Boisvert:different one at a different firm, because obviously that's
Kalee Boisvert:going to impact your room. A few more considerations. TFSA
Kalee Boisvert:accounts have to be an individual name, they cannot be
Kalee Boisvert:joint accounts. So if you're married, you would have one in
Kalee Boisvert:your name one in the name of your spouse, you cannot just
Kalee Boisvert:have a joint account. You can however gift money to spouses or
Kalee Boisvert:a spouse. Sounds like you have multiple spouses when I said
Kalee Boisvert:that a spouse a child children, you can gift money, and they can
Kalee Boisvert:contribute to their TFSA accounts. Because this is after
Kalee Boisvert:tax money, right? The money has already been taxed by CRA by you
Kalee Boisvert:gifting it to these people to put in their tax free savings
Kalee Boisvert:accounts. There's nothing sort of that you're going, you know
Kalee Boisvert:beyond or trying to be tricky or sneaky or anything like that
Kalee Boisvert:with taxes, it's after tax money, you've already paid the
Kalee Boisvert:tax. And so if you're gifting it to a spouse to help max out
Kalee Boisvert:their TFSA, or again, a child, it's a great idea for your
Kalee Boisvert:children to get them started. That's completely okay. Usually
Kalee Boisvert:there might be one extra step like a letter, you have to sign
Kalee Boisvert:acknowledging that you're putting it into their account
Kalee Boisvert:just because it's going to different names or something
Kalee Boisvert:like that, but nothing beyond that it's still allowed. In
Kalee Boisvert:provinces in most provinces, you have the ability to self select
Kalee Boisvert:a beneficiary or beneficiaries for the account. So make sure
Kalee Boisvert:you do do that. So if something were to happen to you, you can
Kalee Boisvert:select a beneficiary or beneficiaries. And that's
Kalee Boisvert:obviously who this the proceeds would be distributed to.
Kalee Boisvert:Again, if it's a spouse, it's very tax efficient, it just
Kalee Boisvert:rolls over to them no tax implications, and it doesn't
Kalee Boisvert:impact their room. So if they're already maxed out on room, but
Kalee Boisvert:they're your spouse passed away, your their TFSA can still roll
Kalee Boisvert:into yours, it doesn't impact room. It doesn't mean you over
Kalee Boisvert:contributed or anything like that, because between spouses
Kalee Boisvert:that is allowed. You can make a cash deposit to TFSA accounts,
Kalee Boisvert:or you can actually move holdings in kind. So let's say
Kalee Boisvert:you started an investment account, and just completely
Kalee Boisvert:didn't even think about opening a TFSA. And now you're going oh
Kalee Boisvert:man, I wish I would have you know, put these shares of Apple
Kalee Boisvert:or whatever it is I'm just naming a random stock in a Tax
Kalee Boisvert:Free Savings Account. So you can open a Tax Free Savings Account
Kalee Boisvert:move the shares in kind, what you need to be mindful of is
Kalee Boisvert:that if there is already a gain, it's just it's counted as a
Kalee Boisvert:deemed disposition the day you move it over. So let's say you
Kalee Boisvert:bought a stock and it was trading at $5. And then you made
Kalee Boisvert:the decision to move it over to the TFSA. When it's now trading
Kalee Boisvert:at $6 A share you will have to account for that gain that it's
Kalee Boisvert:had in the in the meantime, basically from when you bought
Kalee Boisvert:it to when you're moving it over. Any future gains will go
Kalee Boisvert:on to be tax sheltered. So that is beneficial still but you will
Kalee Boisvert:have have to be mindful of and report that gain from when it
Kalee Boisvert:moved over. And then keep in mind, it doesn't work both ways,
Kalee Boisvert:though. So CRA will require you report the gain, if there was
Kalee Boisvert:one when it was moved over to the dfsa. But if there was a
Kalee Boisvert:loss, and then you move it to the TFSA, you cannot keep that
Kalee Boisvert:capital loss for tax purposes. It's sort of just a wash. And
Kalee Boisvert:unfortunately, it's just you're putting something in at a lower
Kalee Boisvert:value, but again, on later, any further growth or dividends or
Kalee Boisvert:income, or anything like that will be sheltered from that
Kalee Boisvert:point on. But again, you don't get a benefit of the the loss
Kalee Boisvert:for moving over at a loss. So that's unfortunate.
Kalee Boisvert:RSP versus TFSA. So a big question is, people come to me
Kalee Boisvert:asking, you know, which one should I be putting money in?
Kalee Boisvert:Great question. And both really have pros and cons. And there's
Kalee Boisvert:a lot of different factors that come into play. And they will
Kalee Boisvert:depend on your circumstances and the flexibility and things like
Kalee Boisvert:that. But if we're just bringing it back to like, if we're
Kalee Boisvert:bringing it down to very simplicity terms, and saying, if
Kalee Boisvert:you're thinking of using the account for a retirement savings
Kalee Boisvert:goal, and wondering which would be the most tax efficient, then
Kalee Boisvert:there is a general rule of thumb on which to use first, and it's
Kalee Boisvert:works as this. So if you think you'll be in a lower tax bracket
Kalee Boisvert:in retirement than you are in right now, you would be better
Kalee Boisvert:off to first invest in your RSP account before a TFSA. If you
Kalee Boisvert:think you would be in the same tax bracket in retirement than
Kalee Boisvert:you are now, then it's either or really, no one really makes a
Kalee Boisvert:drastic difference tax wise. So you could do TFSA or RSP. If you
Kalee Boisvert:think you will be in a higher tax bracket in retirement than
Kalee Boisvert:you are currently in right now in your working years, then you
Kalee Boisvert:are better off to be investing first in your TFSA account. And
Kalee Boisvert:a little bit to kind of understand what the why this
Kalee Boisvert:rule of thumb, I'm saying exists is think about it this way. So
Kalee Boisvert:in the scenario of being in a lower tax bracket in retirement
Kalee Boisvert:than you are now. So let's say right now you're in a 35% tax
Kalee Boisvert:bracket. And then let's say in retirement, you're in a 25% tax
Kalee Boisvert:bracket. Well, if you make an RSP contribution, while you're
Kalee Boisvert:in this 35% tax bracket, anything you contribute, you
Kalee Boisvert:will generally get back about that 35% tax that you paid on
Kalee Boisvert:that money. So you put it into an RSP, you get a nice little
Kalee Boisvert:tax break, you will subsequently pay the tax later on. But if
Kalee Boisvert:you're in a lower tax bracket, let's say that 25% tax bracket,
Kalee Boisvert:then you're only paying 25%. Whereas originally, you would
Kalee Boisvert:have paid 35%. So you've saved yourself 10% tax by doing that.
Kalee Boisvert:So that's still the reason why RSP accounts are also a great
Kalee Boisvert:tool and do make sense for those retirement savings. So RSP and
Kalee Boisvert:TFSA, though that's the general rule of thumb, what I've just
Kalee Boisvert:described, again, it's going to be a bit different for everyone.
Kalee Boisvert:And there might be you know, still question mark being well,
Kalee Boisvert:I don't know if I'm going to be in a higher tax bracket than
Kalee Boisvert:then am I and now or what if they change the tax brackets,
Kalee Boisvert:and they go a lot higher than than they are right now. So yes,
Kalee Boisvert:there's still unknown factors. It's not as black and white as
Kalee Boisvert:and easy and straightforward, probably as we would like. But
Kalee Boisvert:that's again, the general rule of thumb. So I don't like I
Kalee Boisvert:don't necessarily want you to completely, you know, write off
Kalee Boisvert:one or the other. Again, both have their pros and cons, and a
Kalee Boisvert:place and they're going to be a little bit different for
Kalee Boisvert:everyone. So it's good to kind of go through that scenario for
Kalee Boisvert:yourself. Hopefully, you found this helpful and talking all
Kalee Boisvert:about TFS. As it got you you know getting inspired to do some
Kalee Boisvert:investing or open your TFSA account if you don't already
Kalee Boisvert:have one. And remember a Tax Free Savings Account. It's just
Kalee Boisvert:type of account, there's lots of possibilities on what you choose
Kalee Boisvert:to do within your account. Make sure you do consider your goals,
Kalee Boisvert:your timeframes, your tolerance for risk, when done designing
Kalee Boisvert:that investment plan. And of course, if you don't want to do
Kalee Boisvert:it alone, you don't have to, you can seek the support from a
Kalee Boisvert:financial professional or anything like that. But again,
Kalee Boisvert:the key here, which I always want to say is the key. And the
Kalee Boisvert:important part is it's all about taking action. So if you don't
Kalee Boisvert:have a Tax Free Savings Account in place, maybe this is your
Kalee Boisvert:goal for January 2022. You're going to get one of those
Kalee Boisvert:started, you're going to get it open, you're going to start
Kalee Boisvert:putting some money in every month, you're going to set up an
Kalee Boisvert:automatic contribution into it. Get going on some investing in
Kalee Boisvert:it, maybe you have adult young adult children, and you know you
Kalee Boisvert:the goal is I'm going to get going to get on them about
Kalee Boisvert:getting one of these open and I'm gonna say that their reward
Kalee Boisvert:is you know, a $500 deposit from me or something like that. into
Kalee Boisvert:their account not from me like it's from you as their parent.
Kalee Boisvert:Unfortunately, I'm not giving your money to everyone and their
Kalee Boisvert:children but I do highly encourage you to think of that
Kalee Boisvert:too if you have children and this is a great way to get them
Kalee Boisvert:started young adult children. So I hope you enjoyed the episode.
Kalee Boisvert:Thank you so much for tuning in, and I will catch you on next
Kalee Boisvert:week's episode. Thank you bye
Kalee Boisvert:I hope you found value in this episode. And because I'm such a
Kalee Boisvert:proponent of taking confident action, I want to pose a
Kalee Boisvert:question to you the listener. What is one action that you feel
Kalee Boisvert:inspired to take after listening to today's episode? If you enjoy
Kalee Boisvert:listening, please subscribe and share with your friends and
Kalee Boisvert:family. Thank you so much and I will catch you next time
