Nov 25, 2019
This week, that Canadians are missing out when it comes to tax
free savings accounts, and how they can get the biggest bang from
Pattie Lovett-Reid has more.
Yes. I wrote a blog on it and I did so because you know, when I looked at the report that came up from RBC, 43% of Canadians that they surveyed still really felt misinformed about how to use a tax-free savings account.
The problem is it's a decade old. It came out with a lot of fanfare. Many would argue that the title savings misled it to be a savings account rather than possibly an investment vehicle or even a savings vehicle. But it is a plan that you can put a whole host of investments in.
It came out a decade ago. We're not talking about it anymore.
People, we just assume that, okay, we understand RSPs, we
understand tax free savings accounts. And the fact is many
Canadians simply just don't get it. In the blog, I do highlight
what can go in, what doesn't go in.
Rob, I'm interested in your perspective because you're dealing with clients. Do they really not understand it and not maximize it? Because where I'd love to see things happen is stocks that you think have the potential to go higher. They're in line with your tolerance for risk. A great opportunity, no tax on the capital gains, but if there's a loss, yikes, there's no offsetting,
I think you're dead on here. When I speak to clients, it's often
they're confused. They'll have the cash or GICs in there in the
savings account. We bring it over, we build the portfolio, we'll
build their risk tolerance, asset allocation and of that we will
take, as you mentioned, the emerging markets or the growth stocks
or whatever's going to grow. or we'll take, you know, if we have a
high yielding debt instrument that is taxable, that could also
potentially go into TFSA.
You've got a private debt instrument. It's yielding 8% or something taxable, you know, that could go into TFSC or an NRSP instead of a non-registered.
What are the things that I also think about is think about it from a strategic perspective and I highlight three different areas. If you're someone who's retired, you no longer have employment income, can't put any more money into an RSP.
What you can do is use a tax-free savings account to supplement
your retirement income. The other is saving for your child's
education. I love RESPs, registered education savings plans, but
also a tax free savings account allows you to take money in and out
without the tax on it. And the final one, this is a great way to
split income. You could contribute to a spouse, lower income, any
gains that are realized in that plan. You're not going to be taxed
on it. No attribution, but we try to cover it in the blog.
I like to think of them as our funds for Canadian university students or no illusion. Okay. We're going to be right back. You are watching the street right here on BNN Bloomberg.