TFSA contribution limit goes to $ 6,000 for 2019.

BY: FAZAAD BACCHUS 

Great news! As you know the TFSA also known as the tax-free savings account is one of the most popular investments for Canadians over the age of 18. This investment was first introduced in 2009 and most Canadians have taken advantage of this particular investment. The main reason is as it says; it’s the tax-free savings account, where any growth on your investment is earned at a tax-free rate, where simply put you don’t have to pay any taxes on the growth. This is the only financial instrument available in Canada where your money can grow tax-free.

Contribution limits were $5,000 from 2009 until 2012, then contribution limits changed in 2013 and 2014 to $5,500 and for 2015 the contribution limit was $10,000. The contribution limit for 2016 changed back to $5,500 and continued to be so thereafter. If you have never invested any money into a TFSA then you have an available contribution room, meaning that you can invest as much as $57,500 for the year ending 2018. If you have not made any deposit for 2018 as yet there is no need for panic as the contribution room will also be carried forward.

Over the years, many investors were hoping that the government would allow a much larger deposit into the TFSA. Well, that long wait is now over, as the government has recently announced that for the year 2019, the contribution amount for a TFSA will now move to $6,000. Of course, it is only $500 more than the previous year’s contribution maximum, but it is $500 more and still cumulative.

The typical TFSA consist of either cash or mutual funds at a bank or financial institution however they can be much more, as they can be extended to certain approved securities and certain shares of small business corporations. A more complicated TFSA may even include foreign holdings; however, this may attract foreign tax. An important point to note is that a TFSA can be issued by any bank, credit union, trust company or insurance company. Therefore, you are not limited to whom you may choose to invest with.

If you have been looking at the markets recently, you would notice all of the markets are quite down, and as a result, most investors will be reluctant to invest in this type of market.  However, when is the best time to buy something? Is it when the markets are down or when the markets are up? The markets are currently down therefore if you need to take advantage of the market now would be the best time. But don’t make the mistake of going it alone.

An advisor should help you decide on the type of TFSA and the expected value of your investment in years to come. Certainly, individuals who do not want to play with their money should sit with his or her financial advisor and develop a proper plan. It is important to calculate your risk tolerance so that your investment choice doesn’t keep you up at night. The TFSA does not have to be a

risky investment, it can be in a GIC, bonds, balanced market, or it can be in the equity market.  Talk to an advisor today.