Retirement Planning, Financial Planning, TFSA, Investment Strategies, Investments, Financial Literacy

Aligning your TFSA with financial goals

Jan 14, 2022

For 2022, you can contribute $6,000 to your Tax-Free Savings Account (TFSA), bringing the cumulative total of TFSA contributions to $81,500, or $163,000 between a couple. This means that a TFSA can help meet any investment objective.

Your first decision

You need to look at all components of your financial plan and decide where TFSA investments can help you the most.

Education Planning

To meet today’s increasing education costs, a TFSA can boost savings from a Registered Education Savings Plan (RESP), and a couple with more than one child can dedicate both accounts to the goal.

Retirement Planning

As a retirement savings vehicle, a TFSA builds an income source that’s tax-free and doesn’t affect eligibility for Old Age Security (OAS) benefits.

Estate planning

TFSAs have great flexibility for estate planning purposes. You can use your TFSA to:

Provide heirs with a tax-free inheritance
Offset taxes payable by your estate
Leave a charitable gift and claim the charitable donation tax credit.

To name a few…

Tax planning

As an income-splitting strategy, funds can be gifted to your spouse, children or grandchildren which they can contribute to their own TFSAs.

Savings

A TFSA is always ideal when saving for a short-term purchase, as withdrawals are added to contribution room the following calendar year. Some people even use a TFSA as an emergency fund.

Remember, how you want to use your TFSA is the first step to deciding what sort of investments you want to hold. Once the use is determined, we can recommend which investments suit your objective and risk tolerance.

Future steps

Your TFSA investments may change when your objectives or time horizon shortens. For example, a TFSA for education savings typically becomes more conservative as secondary school graduation approaches. And once your child graduates from university? Your TFSA may become a growth-oriented account for your retirement.