64 thoughts on “How the Tax Free Savings Account Really Works”

  1. What do you mean by permanent loss in TFSA room? Say someone has 11,000 in TFSA, and they lose 5,500 in capital loss, the next year, when they get another 5,500, they'll only have 11,000 in room? Not 16,500 in room?

  2. For an individual to lose 5500 in one year is highly improbable. That means you sold your stock at zero dollars. Although it is possible that a company gets bankrupt, the chances that it happens are low. Most people don't aim for enough gains and buy 2-3% GIC!

  3. Sorry Ben you said at the end “the TFSA is an inculqua le tool for building long term wealth,” but you recommend putting low cost index funds within it. Wouldn’t low cost index funds in a TFSA still be considered “building long term wealth”?

  4. Additionally, the CRA has been known to go after folks who have had massive gains in their TFSA due to day trading using the excuse that day trading is a "business" and not a valid use for that account.

  5. Hey Ben, fantastic video. Can you please clarify something? In one example you mention that a speculative stock that drops to zero could have a permanent decrease on your TFSA room. Is there anyway to remedy that? For example let’s say after a bad investment you take another crack at investing within your TFSA, but this time luck is on your side and you grow your TFSA to a very large sum. Now you decide to withdrawal all of your money in your TFSA to buy property. At the start of the following calendar year wouldn’t you now have all the added contribution room from that large withdrawal in addition to any new contribution room for the year?

  6. I am in work permit, I came to Canada in 2015. And TFSA contribution room is about 52,500 as of today. 

    My 1st Question is: I am not a Canadian, can I take an advantage of TFSA account?

    My 2nd Question: I have just lived for past 3 years, why am I given the contribution room of 52,500? Isn't it should be around 20k or something?

    Thanks in advance!

  7. Very informative video. Question: how do you feel about owning an index fund within TFSA and writing covered calls against that fund. For example, long HXT:TSX and short a call against that index fund. Do you feel that it is a sensible strategy or not?

  8. How the heck do I know my limit if I have already made gains in the account? I always assumed I would go to the limit, and then just start moving shares from my TSFA to a taxable account, but I assume if you can destroy the limit, the opposite must be true when you make gains.

  9. You said plus the withdrawal from the previous year. So if I took money from my tfsa 2 years prior can I not add that much back into my tfsa? I would have to recontribute within a year the money that I withdrew

  10. Thanks Ben, excellent videos. If you live abroad, do you forfeit your contribution room for the years you lived abroad?

  11. Love the videos. I liked and subscribed. Here is a question. How much money should you have before you open your own discount broker account so you can start buying ETF monthly instead of someone manging your money for you? Let's say I have time to invest like 1 free weekday every 2 weeks and I will not be buying individual stocks only Vanguard and other low MER index funds.

  12. I don't do investments at all, I just contribute and use my TFSA as a normal savings account. Am I safe from permanent decreases? Also, I have only had a TFSA since 2013; Is my total allowable calculated from 2013 to now, or is it still from 2009 to now? ( I was 18 in 2009). Thanks

  13. How about a video on choosing which funds you should put in your pre tax, tax free, and taxable accounts to minimize ones taxation. For example if bonds are expected to have lowest yield, keep them in the taxable account, etc.

  14. I'm getting more money than I need this year for school from an RESP. If the money I put in is more than the yearly limit but less than the max that's fine right? I'm only going to use a HISA because the money is for school and I'll take it out in a year. If I do this my limit won't be negatively impacted right? Let's say I put in 8k now and take it out next August, my total limit would be 22-8 in 2019, but in 2020 the limit would be the full 27.5 right?

  15. I have a tfsa but its not in any stocks its just pure cash at the moment, I think I get 3% on it right now, a banker keeps suggesting I switch to a mutual fund to enjoy more gains. Which sounds good in theory but we're overdue for a economic crash and I feel like if I put it in now I'd lose money at least in the short run and would prefer to wait for the rebound to invest it. Is that how mutual funds work?

  16. The way I am looking at TFSA is, if you've decided to go aggressive anyway, I mean take big risks and you can afford the loss, TFSA is that extra edge in case things go really well. If TFSA is the (poor) excuse to take big risks then you've missed the point and took more risk than you should have.

  17. If Investor X invested in the latest speculative stock and their $5,500 became $100k (by some miracle) , would the alternative be true? Would that investor now gain 100k of TFSA room upon withdrawal (in addition to next years' likely $5,500)?

  18. Makes some very good points! I bought WEED stocks years ago in my TFSA and the value has gone through the roof! that was a gamble that paid off but your point on capital losses is well put. I should probably speak with my bank about setting up a trading account in my taxable accounts lol.

  19. As an investor starting out, this is exactly why I bought into index ETFs in my TSFA…even with the market on a downfall at the moment.

  20. The TFSA is great. Then Vanguard launched their asset allocation funds. The TFSA and VGRO is simply a sweet combination. No need to re-balance or tax loss harvest. I believe the TFSA is one of the best vehicles to invest in. I would never waste any of the contribution room.

  21. So if I have questtrade what’s the best account I should use for active trading if I currently am doing it in a TFSA but then again I’m not making a killing

  22. would that be used as a business, or private account?

    p.s.

    is that only for canada, or is it for all countries ( the world ) ???

  23. So can I use my TFSA account to invest in stocks for the portfolio. I set my TFSA up when I was 18 and I put about $100/month into it but other than my actual contribution I don't see alot of growth.. thanks!

  24. Hi Felix, would you recommend invest inside an RRSP in securities like stocks? I would get a tax deduction and same time make some money the only downside is waiting u til 71 to get back that money…what arw your thoughts….thanks..

    Pd I just subscribed

  25. I'm confused about stock trading. I'm just getting into it and now am seeing statements that I can be taxed from sale profits. So am I not allowed to invest in individual stocks from my TFSA ?

  26. Wish we had this in the United States they tax all income accept for Roth retirement & cash account and you got to wait to 65 to access it.

  27. this is a very good point. I wish I heard about it sooner. Luckily i didn't lose too much. Thanks for the video.

  28. Very informative! However a stock falling to 0$ is practically impossible unless you've invested in a tech security with no growth/profit in the next 6 months and hibernated the entire time.
    My question would be. If your $5500 go to $1. And you withdraw $1. You technically only have room for $1 to put into your TFSA correct (+next year $)

  29. Great video! Quick question, I checked my CRA account to see my contribution room for my TFSA, and it said that it is $63,500.00. So If I opened a TFSA this year, where the total contribution room from 2009 is $63,500.00, does that mean I can contribute that amount this year? (also, I opened a TFSA in 2010 but closed it that same year. Not sure if that matters).

  30. Only thing I don’t agree with is TFSA is a gift from the government. It is just money not stolen from them.

  31. I wonder how a TSFA works when you investment amount is larger than the yearly allotment. I suspect I'd use the accumulated amount for a while, but then it would max out. Is there ever a complication where money could dissappear?

  32. Im using a tfsa for my investors edge, however I'm not chasing "the next big stock". Atm I'm currently grabbing, in small handfuls, dividend shares.

  33. Great video thanks. So currently I have a small amount of cash in my RBC TFSA. I would like to put more money towards my TFSA in the form of index funds; however, my bank (RBC) only offers cash, GIC, and mutual fund options for the TFSA. Is TFSA only available through a traditional bank, or can I purchase index funds through other means? This is probably a stupid sounding question but I am new to investing. Thanks.

  34. Gift!

    On what planet is a promise to not steal a gift?

    …and they don’t even honour the gift in some cases…

  35. so is it worth it to just pay the taxes? because tfsa and rrsps have no annual fees in questrade which I'm using

  36. As someone who has invested in the TFSA with a mix of individual stocks and index funds ever since The TFSA has come into existence, this information is enlightening. Thanks Ben. Great videos and podcast!

  37. These Videos are ADDICTIVE. They hurt my head, but amazing quality of information which virtually no bias and zero BS.
    They are a bit complex so I have to re watch them. Great work Ben

  38. Just stumbled on your video by accident (first time watcher here) and have to say that this is great advice, even in the comments, they all seem pretty informed. I couldn't help but to take your advice at the end of your video about commenting on some topics that we would like to get some advice from you about. So i do have one for you; have you ever discussed LIRA. I am a part time self-investor and I would like to know more about the tax situation on a LIRA. Eg. Is the 15% Us non-resident tax exempted from this account, like dividends, and capitol gains. Part of my "self-schooling" right now is to learn about LIRA accounts before transferring a pension from an old company.

  39. Your videos are amazing – thank you so much….please help me through this example – i have invested the full amount available in my TFSA investor account…purchased WARRANTS for an MJ stock .

    The price of the stock will move from 0.10 cents to $3.15 very soon as the sector heats up and contracts announced. I can currently buy and sell the warrant with no issue.

    What happens when the price becomes $3.15 and the warrant is in the money. There are strict penalties and investment rules that nobody explains. Does anybody know the rules regarding the TFSA and warrants..thanks for helping…did you want to know the MJ name….

  40. Hi Ben, thank you for the very informative video and warning about captial losses affecting the room. the word Permanent is really worrisome. I wonder if this room can be recovered to the maximum cap with significant profits in subsequent years. For e.g :

    Assuming CRA adds 6000 to new limits of years 2020 and 2021,

    2019 opening limit : $17000 ; losses incurred 3000, I withdraw 14000
    2020 limit : 14000 (prv withdrawl) + 6000 (new) = 20000 (which could have been 23000 without losses; max cap)

    What if in 2020, I make 4000 profit in the account. Could 2021 look like 26000 (new) or 29000 (new+profits)? … As, for someone who never had any losses, the limit would look like 29000 (max cap)

    Thanks,

  41. I want to open a TFSA account. I'm a complete newb and trying to make sense of all of this, how do I open a TFSA and put money into an index fund? What index fund and I just tell the bank teller? Should I just get an accountant lol

Leave a Reply

Your email address will not be published. Required fields are marked *