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It seems everyone has a bucket list these days, and the team at RBC InvestEase is no different. Our bucket list consists of one item—helping Canadians get off the sidelines to start saving and investing for their future!

Opening a TFSA or RRSP, or even trying to choose between the two, always seems to be at the top of everyone’s list of questions when they speak with our Portfolio Managers. We know many people trying to invest for their future are put off or even intimidated by the terminology and acronyms that dominate the industry.

We want to make this easy for you and we’ll stay with our theme of buckets to make this happen. Think of TFSAs and RRSPs as different types of accounts—or buckets—that you put money into to save and invest for future goals. The acronyms may sound complex but these are just types of accounts that have different features to encourage saving and investing.

We’ll explain some of the important features of a TFSA in this article. Part 2 of our article lays out the features of an RRSP

TFSA

  • What does the acronym TFSA mean? Tax-Free Savings Account
  • Who can open a TFSA with RBC InvestEase? Three items to consider. You must be 1) a Canadian resident, 2) with a valid Social Insurance Number (SIN), 3) who has reached the age of majority in your province or territory of residence (18 years of age in Alberta, Ontario, PEI, Quebec, and Saskatchewan. 19 years of age elsewhere.)
  • What’s the benefit of a TFSA? All of the gains and income earned in a TFSA are not taxed, which means you’ll have more savings and be able to reach your investment goals faster. Plus, you can withdraw your money at any time without penalty.
  • How much money can I put into a TFSA?
    • Official estimate: Visit the Canada Revenue Agency (CRA) website here. Once you log in, scroll to the ‘TFSA contribution room’ link. This is the amount you had available as of January 1st so subtract any TFSA contributions you’ve already made this calendar year.
    • Unofficial estimate: To just get started in 2019, begin with the $6,000 limit and subtract any contributions you’ve already made this year.
    • Unofficial estimate considering carry forward amounts: The table below provides your TFSA limit assuming you haven’t contributed to one previously. If you have, simply subtract that amount from the appropriate number in the table.
      Unofficial estimate considering carry forward amounts for T F S A:
      Your Birth Year TFSA Contribution Limit
      2001 $6,000
      2000 $11,500
      1999 $17,000
      1998 $22,500
      1997 $32,500
      1996 $38,000
      1995 $43,500
      1994 $48,500
      1993 $53,500
      1992 $58,500
      1991 or prior $63,500
  • What else should you know? You can use a TFSA to save for any future goal: a down-payment on a home, a vacation, your retirement, or just ‘the future’. Also, withdrawals from a TFSA are not taxed. You won’t be able to put this money back into a TFSA until the following calendar year, but you’ll always be on top of this by following the ‘official way’ to knowing your TFSA limit.

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RBC InvestEase Inc. provides online discretionary investment management services. Other products and services may be offered by one or more separate corporate entities that are affiliated to RBC InvestEase Inc., including without limitation: Royal Bank of Canada, RBC Direct Investing Inc., RBC Dominion Securities Inc., RBC Global Asset Management Inc., Royal Trust Corporation of Canada and The Royal Trust Company. RBC InvestEase Inc. is a wholly-owned subsidiary of Royal Bank of Canada and uses the business name RBC InvestEase. In addition, the RBC iShares ETFs in which RBC InvestEase Inc. clients invest are managed by BlackRock Asset Management Canada Limited. RBC Global Asset Management Inc. and BlackRock Asset Management Canada Limited have entered into a strategic alliance to bring together their respective ETF products under the RBC iShares ETF brand, and to offer a unified distribution support and service model for RBC iShares ETFs.

The services provided by RBC InvestEase are only available in Canada.