| In 2009, Canadians will have access to the newest | | | | purpose. For example, a TFSA owner could utilize |
| type of savings account, the Tax Free Savings | | | | those funds to purchase a home, a car, to send their |
| Account, which will give investors an opportunity to | | | | children to college or as a retirement savings vehicle. |
| capitalize on tax free investment benefits. This new | | | | This flexibility to withdrawal funds without a financial |
| account is not widely understood, however, | | | | penalty creates flexibility that is attractive to most |
| Canadians are excited to learn how it can benefit | | | | investors. |
| their financial futures. | | | | One last key difference between this new TFSA |
| One of the primary points to understand about the | | | | account and other retirement accounts is that money |
| TFSA is that it is not merely a savings account as | | | | can be re-contributed into the account at a later |
| you may be familiar with from your local banking | | | | date. For example, if an individual contributes their |
| institution. A savings account creates an image for | | | | maximum allowable funds into the TFSA account |
| many of a low interest, liquid type of cash account. | | | | each year and makes a withdrawal 5 years after |
| And while you can invest into cash within your TFSA, | | | | they open the account, they can re-contribute the |
| it presents virtually a limitless list of investment | | | | withdrawn amount into their TFSA so that they can |
| options to consider investing into, including securities, | | | | take advantage of the tax free benefit again within |
| debt instruments and even real estate investments. | | | | their future. So, the ability to use this investment |
| An investor can invest in virtually whatever | | | | vehicle for shorter term financial goals as well as for |
| investments they wish inside of their TFSA accounts. | | | | long term financial goals is appealing to most |
| Most Canadians are familiar with the traditional RRSP | | | | investors. |
| investment account, commonly used for retirement | | | | While no investment vehicle is a perfect match for |
| purposes. Unlike the RRSP account, contributions | | | | every investor, there are several key advantages to |
| made into the TFSA account are made on an after | | | | the TFSA that should be taken into consideration |
| tax basis. Therefore, when the account owner | | | | when creating both a long term and a short term |
| withdrawals their funds, they are not subject to | | | | financial strategy. Once the decision has been made |
| income taxes as they would if they had invested into | | | | to utilize the TFSA for financial goals, the specific |
| an RRSP account. This tax free benefit is one of the | | | | investments must be selected for the account to |
| largest draws for investors to consider utilizing the | | | | hold. Personal risk tolerance, total investable assets, |
| TFSA for their financial purposes. | | | | asset allocation, investment time frame and |
| Another key difference between the TFSA and | | | | investment purpose should be taken into |
| traditional investment accounts is that funds can be | | | | consideration when making these individual |
| withdrawn from the TFSA for virtually any financial | | | | investment selections. |