Do you want to start saving for a car? A vacation? A renovation? If you have goals you want to reach within the next five to 10 years you need your savings to grow as quickly as possible.

In a regular, non-registered account, you pay tax on every dollar of interest, dividends and capital gains which slows down your returns. 

There’s another option that can help you reach your financial goals sooner. In a Tax-Free Savings Account (TFSA):

Here’s an example; let’s say you:

After one year, your tax savings will be $20. 

That doesn’t seem to be much, but if you keep doing the same thing for:

Best of all, unlike RRSP withdrawals, TFSA withdrawals are tax-free. So, when you’re ready, you can use all the money you’ve saved and invested toward whatever you’ve been saving for. 

To make the most of your TFSA opportunity, follow these steps:

  1. Define your goals for the next five to 10 years
  2. Contribute up to the maximum allowed each year
  3. Watch your savings grow faster because they’re growing tax-free

Calculate how much you can save

* For illustration purposes only. These examples are based on an Ontario resident with annual income of $60,000.

Note: This article is for illustrative purposes only.

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