Now that RSP season is over for last year, attention is turning to TFSAs – tax free savings accounts – and how they fit into the mix of personal financial holdings for the average Canadian. And a survey of Canadians and their approaches to TFSAs conducted for BMO Bank of Montreal provides a little insight that suggests we really don’t have our heads around this one yet.
The TFSA is the youngest of the tax-assisted investment tools for the average person and that means we tend to be the least familiar with them. In fact, two-thirds of us are unable to identify the differences between a TFSA and an RRSP.
Consequently more of us tend to leave cash in their TFSA but that also means we lose the benefit of tax-free growth. Here on the Prairies, though, the figures suggest we may have the best handle on it as we hold the least amount of cash in TFSA when compared to the rest of the country.
Further, age seems to be a factor in this decision-making process as Boomers are least likely to hold cash while Millennials are the most likely.