5/05/2014

Do you have a TSFA?

My Money, My Choices - Level 3, Activity 9 & 10

From the blog posts, and articles that you still see regularly around the merits of TSFA's versus RRSP - it's no wonder people are still confused about what they are for, and if they should have one.

Level 3 activity 9 and 10 are to open a TSFA and automate contributions to it.  It's the easiest (only?) way in Canada to save money (up to $5,000/year) and not pay taxes on the gains earned on the money.  For a lot of people who are lower income, it makes sense to save for retirement this way; Jordan and however need to use RRSPs for retirement to capitalize on deferring the taxes payable until we're in lower tax brackets in retirement.

We use my TSFA to save for eventually a baby.  We currently have $3,300ish and the goal is $10,000 to help offset maternity/parental leave no income. We save $100 every month to the fund, to grow it slowly but surely.  I see this account as I see our retirement accounts - it cannot be touched unless it's for the very specific reasons we've laid out (I'm so much more flexible with our Emergency/Curveball accounts which is perhaps why we've never achieved a particularly high goal for the Efund).

What do you use your TSFA for?
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3 comments:

  1. I have a TFSA and currently its my emergency fund. I'm putting just over $300 per month in there to hopefully have $2500 in there by the end of the year. Once my EF is fully funded (I'm thinking $5K for mid-term goal then $10K eventually) I would like to diversify and buy index funds/ETFs/stocks in my TFSA and my RSP. Since I have a company pension, I want to focus on using my TFSA more than my RSP but I have to repay the first time homebuyer's plan first and build up these accounts over time. You guys are doing great with your savings. Keep up the good work!

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  2. Actually, it's more than 5K/year.

    The annual contribution limit for the TFSA was $5,000 for 2009 - 2012. It was increased to $5,500 effective January 2013.

    ReplyDelete
    Replies
    1. Yes! You're right, thanks for reminding me.

      Delete

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