This is the time of year when we start thinking about RRSPs as the deadline for making contributions towards the 2021 tax year is a little over a month away.
When we think RRSP, we probably also think about tax free savings accounts (TFSA) which is the other major tax-favored savings vehicle available to the average Canadian.
The timing also prompted BMO Bank of Montreal to conduct its annual year-end survey of how we are doing on the savings front.
COVID-19 — on this particular metric — has been our friend.
Limitations on mobility and restrictions on entertainment facilities has made it easier to save money. The bank’s economists are estimating we accumulated in the neighborhood of $300 billion in excess savings through the pandemic.
The TFSA is growing in popularity with about two-thirds of us now holding one. They are saving cash. About half of us have at least some cash in the account while three out of 10 say cash represents the lion’s share of their account value even though we are allowed to hold income-generating instruments such as bonds or equities in a TFSA.
